Apyx Medical (APYX) 10-Q 15 May 14 2014 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Mar. 31, 2014	1-May-14
Document And Entity Information	'	'
Entity Registrant Name	'BOVIE MEDICAL CORP	'
Entity Central Index Key	'0000719135	'
Document Type	'10-Q	'
Document Period End Date	31-Mar-14	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--12-31	'
Is Entity a Well-known Seasoned Issuer?	'No	'
Is Entity a Voluntary Filer?	'No	'
Is Entity's Reporting Status Current?	'Yes	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Common Stock, Shares Outstanding	'	17,826,336
Document Fiscal Period Focus	'Q1	'
Document Fiscal Year Focus	'2014	'

CONSOLIDATED_BALANCE_SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Current assets:	'	'
Cash and cash equivalents	$5,816	$7,924
Restricted cash	898	'
Trade accounts receivable, net	2,235	1,990
Inventories, net	8,267	8,415
Current portion of deposits	1,179	948
Prepaid expenses and other current assets	982	545
Total current assets	19,377	19,822
Property and equipment, net	6,950	7,063
Brand name and trademark	1,510	1,510
Purchased technology, net	526	575
Deferred income tax assets, net	3,378	3,412
Deposits, net of current portion	173	120
Other assets	594	674
Total assets	32,508	33,176
Current liabilities:	'	'
Accounts payable	1,031	1,060
Accrued payroll	111	172
Accrued vacation	111	200
Current portion of bonds payable	'	72
Current portion of mortgage note payable	239	'
Accrued litigation settlement	100	541
Accrued and other liabilities	831	867
Total current liabilities	2,423	2,912
Mortgage note payable, net of current portion	3,353	'
Bonds payable, net of current portion	'	3,185
Derivative liabilities	14,927	5,749
Total liabilities	20,703	11,846
Series A 6% convertible preferred stock, par value $0.001; 3,500,000 shares authorized and issued; preference in liquidation - $7,126,000	2,463	2,259
STOCKHOLDER'S EQUITY:	'	'
Preferred stock, par value $.001; 10,000,000 shares authorized; 3,500,000 shares of series A 6% convertible preferred stock issued and outstanding on March 31, 2014 and December 31, 2013 respectively	'	'
Common stock, par value $.001 par value; 40,000,000 shares authorized; 17,826,336 issued and 17,683,257 outstanding on March 31, 2014 and December 31, 2013, respectively	18	18
Additional paid-in capital	28,769	28,687
Accumulated deficit	-19,445	-9,634
Total stockholders' equity	9,342	19,071
Total liabilities and stockholders' equity	$32,508	$33,176

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
In Thousands, except Share data, unless otherwise specified
Stockholders' equity:	'	'
Series A 6% convertible preferred stock, par value	$0.00	$0.00
Series A 6% convertible preferred stock, shares authorized	3,500,000	3,500,000
Series A 6% convertible preferred stock, shares issued	3,500,000	3,500,000
Series A 6% convertible preferred stock, preference in liquidation	$7,126,000	$7,000,000
Preferred stock, par value	$0.00	$0.00
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$0.00	$0.00
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	17,826,336	17,826,336
Common stock, shares outstanding	17,683,257	17,683,257

CONSOLIDATED_STATEMENTS_OF_OPE

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $)	3 Months Ended
In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Consolidated Statements Of Operations	'	'
Sales	$6,482	$5,696
Cost of sales	3,726	3,545
Gross profit	2,756	2,151
Other costs and expenses:	'	'
Research and development	332	333
Professional services	258	453
Salaries and related costs	907	818
Selling, general and administrative	1,201	1,212
Total other costs and expenses	2,698	2,816
Income (loss) from operations	58	-665
Interest expense, net	-28	-55
Loss on change in fair value of derivative liabilities	-9,599	-34
Total other expense, net	-9,627	-89
Loss before income taxes	-9,569	-754
Benefit (provision) for deferred income taxes	-38	345
Net loss	-9,607	-409
Accretion on convertible preferred stock	-204	'
Net loss attributable to common shareholders	($9,811)	($409)
Loss per share	'	'
Basic (in dollars per share)	($0.55)	($0.02)
Diluted (in dollars per share)	($0.55)	($0.02)
Weighted average number of shares outstanding - basic (in shares)	17,684	17,650
Weighted average number of shares outstanding - dilutive (in shares)	17,684	17,650

CONSOLIDATED_STATEMENT_OF_STOC

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
In Thousands, except Share data
Beginning Balance, Amount at Dec. 31, 2012	$18	$25,517	($2,640)	$22,895
Beginning Balance, Shares at Dec. 31, 2012	17,639	'	'	'
Options exercised, Shares	51	'	'	'
Options exercised, Amount	'	70	'	70
Stock based compensation	'	506	'	506
Stock swap to acquire options, Shares	-6	'	'	'
Stock swap to acquire options, Amount	'	-22	'	-22
Convertible preferred stock - beneficial conversion feature	'	2,616	'	2,616
Deemed dividend on convertible preferred stock	'	'	-2,616	-2,616
Accretion on convertible preferred stock	'	'	-39	-39
Net income (loss)	'	'	-4,339	-4,339
Ending Balance, Amount at Dec. 31, 2013	18	28,687	-9,634	19,071
Ending Balance, Shares at Dec. 31, 2013	17,684	'	'	'
Stock based compensation	'	82	'	82
Accretion on convertible preferred stock	'	'	-204	-204
Net income (loss)	'	'	-9,607	-9,607
Ending Balance, Amount at Mar. 31, 2014	$18	$28,769	($19,445)	$9,342
Ending Balance, Shares at Mar. 31, 2014	17,684	'	'	'

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities	'	'
Net loss	($9,607)	($409)
Adjustments to reconcile net loss to net cash used in operating activities:	'	'
Depreciation and amortization	232	212
Recovery of (provision for) inventory obsolescence	53	-2
Gain (loss) on disposal of property and equipment, net	4	-1
Stock-based compensation	82	50
Change in fair value of liabilities	9,599	34
Provision (benefit) for deferred taxes	34	-349
Changes in current assets and liabilities:	'	'
Trade receivables	-245	948
Prepaid expenses and other current assets	-437	-167
Inventories	95	-551
Deposits	-203	-254
Accounts payable	-29	82
Litigation settlement liability	-441	'
Accrued and other liabilities	-35	154
Accrued payroll	-62	'
Accrued vacation	-89	'
Net cash used in operating activities	-1,049	-253
Cash flows from investing activities	'	'
Purchases of property and equipment	-75	-131
Net cash used in investing activities	-75	-131
Cash flows from financing activities	'	'
Proceeds from stock options exercised	'	18
Repayments of mortgage note payable	3,592	'
Repayment of industrial revenue bonds	-3,257	-34
Repurchase of warrants	-421	'
Net cash used in financing activities	-86	-16
Net change in cash and cash equivalents	-1,210	-400
Cash and cash equivalents, beginning of period	7,924	4,162
Cash and cash equivalents, end of period	5,816	3,762
Interest	28	55
Income taxes	'	'

BASIS_OF_PRESENTATION

BASIS OF PRESENTATION	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
NOTE 1. BASIS OF PRESENTATION	'
	Unless the context otherwise indicates, the terms “we,” “our,” “us,” “Bovie,” and similar terms refer to Bovie Medical Corporation and its consolidated subsidiaries.
	The accompanying unaudited consolidated financial statements have been prepared based upon SEC rules that permit reduced disclosure for interim periods. For a more complete discussion of significant accounting policies and certain other information, please refer to the financial statements included in our Annual Report on Form 10-K/A for the year ended December 31, 2013. These financial statements reflect all adjustments that are necessary for a fair presentation of results of operations and financial condition for the interim periods shown, including normal recurring accruals and other items. The results for the interim periods are not necessarily indicative of results for the full year.

INVENTORIES

INVENTORIES	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
NOTE 2. INVENTORIES	'
	Inventories are stated at the lower of cost or market. Cost is determined principally on the average cost method. Inventories at March 31, 2014 and December 31, 2013 were as follows (in thousands):
		March 31,			December 31,
		2014			2013
	Raw materials	$	4,979		$	5,470
	Work in process		988			882
	Finished goods		2,732			2,455
	Gross inventories		8,699			8,807
	Less: reserve for obsolescence		(432	)		(392	)
	Net inventories	$	8,267		$	8,415

INTANGIBLE_ASSETS

INTANGIBLE ASSETS	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
NOTE 3. INTANGIBLE ASSETS	'
	At March 31, 2014 and December 31, 2013 intangible assets consisted of the following (in thousands):
		March 31,			December 31,
		2014			2013
	Brand name and trademark (life indefinite)	$	1,510		$	1,510
	Purchased technology (9-17 year life)	$	1,441		$	1,441
	Less: accumulated amortization		(915	)		(866	)
	Purchased technology, net	$	526		$	575
	Amortization of intangibles, which is included in depreciation and amortization in the accompanying statements of cash flows, was approximately $49,000 and $22,000 during the respective three month periods ended March 31, 2014 and 2013.

NEW_ACCOUNTING_PRONOUNCEMENTS

NEW ACCOUNTING PRONOUNCEMENTS	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
NOTE 4. NEW ACCOUNTING PRONOUNCEMENTS	'
	We have reviewed recently issued standards and have determined they will not have a material impact on our consolidated financial statements, or do not apply to our operations.

FAIR_VALUE_MEASUREMENTS

FAIR VALUE MEASUREMENTS	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
NOTE 5. FAIR VALUE MEASUREMENTS	'
	Certain assets and liabilities that are measured at fair value on a recurring basis are measured in accordance with FASB ASC Topic 820-10-05, Fair Value Measurements. FASB ASC Topic 820-10-05 defines fair value, establishes a framework for measuring fair value and expands the disclosure requirements regarding fair value measurements for financial assets and liabilities as well as for non-financial assets and liabilities that are recognized or disclosed at fair value on a recurring basis in the financial statements.
	The statement requires fair value measurement be classified and disclosed in one of the following three categories:
	Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
	Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
	Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
	Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. Our derivative financial instruments that are measured at fair value on a recurring basis are all measured at fair value using Level 3 inputs. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
	The following represents a reconciliation of the changes in fair value of warrants measured at fair value using Level 3 inputs during the quarter ended March 31, 2014:
	(in $ thousands)		2013 Investor Warrants		2013 Placement Agent Warrants		2010 Investor Warrants			2010 Placement Agent Warrants		Total
	Balance, December 31, 2013		$	4,599	$	460	$	689		$	1	$	5,749
	Issuances			-		-		-			-		-
	Repurchase of warrants (1)			-		-		(421	)		-		(421	)
	Fair value adjustments:
	Change in fair value			7,670		767		1,151			11		9,599
	Balance, March 31, 2014 (2)		$	12,269	$	1,227	$	1,419		$	12	$	14,927
		-1	Represents amount paid to repurchase warrants exercisable into 142,857 shares of common stock, which were initially issued in the April 2010 capital raise transaction.
		-2	The warrants are valued using a trinomial lattice valuation methodology because that model embodies all of the relevant assumptions that address the features underlying these instruments. Significant assumptions used in the model at March 31, 2014 included the market price of our common stock, an expected dividend yield of zero, the remaining period to the expiration date of the warrants, expected volatility of our common stock over the remaining life of the warrants of 53%, estimated based on a review of our historical volatility, and risk-free rates of return of 0.6% based on constant maturity rates published by the U.S. Federal Reserve, applicable to the remaining life of the warrants. We also take into consideration a probability assumption for anti-dilution.

EARNINGS_PER_SHARE

EARNINGS PER SHARE	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
NOTE 6. EARNINGS PER SHARE	'
	We compute basic earnings per share (“basic EPS”) by dividing the net loss by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share (“diluted EPS”) gives effect to all dilutive potential shares outstanding (primarily stock options). The following table provides the computation of basic and diluted earnings per share for the three month periods ending March 31, 2014 and 2013.
		Three Months Ended
		March 31,
	(in thousands, except EPS)	2014			2013
	Net loss attributable to common shareholders	$	(9,811	)	$	(409	)
	Basic weighted average shares outstanding		17,684			17,650
	Effect of potential dilutive securities		--			--
	Diluted weighted average shares outstanding		17,684			17,650
	Basic EPS	$	(0.55	)	$	(0.02	)
	Diluted EPS	$	(0.55	)	$	(0.02	)
	For the three months ended March 31, 2014 and 2013, options and warrants to purchase approximately 7.5 million and 900,000 shares of common stock respectively, were excluded from the computation of diluted earnings per share because their effects were anti-dilutive. For the three months ended March 31, 2014, the conversion of Series A Preferred Stock into 3,500,000 shares of common stock was excluded from the computation of diluted earnings per share because its effect is anti-dilutive.

STOCKBASED_COMPENSATION

STOCK-BASED COMPENSATION	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
NOTE 7. STOCK-BASED COMPENSATION	'
	Under our stock option plan, our board of directors may grant options to purchase common shares to our key employees, officers, directors and consultants. We account for stock options in accordance with FASB ASC Topic 718, Compensation – Stock Compensation, with option expense amortized over the vesting period based on the binomial lattice option-pricing model fair value on the grant date, which includes a number of estimates that affect the amount of our expense. During the three months ended March 31, 2014, we expensed approximately $82,000 in stock-based compensation.
	Activity in our stock options during the period ended March 31, 2014 was as follows:
		Number Of		Weighted
		Options		Average
		(in		Exercise
		thousands)		Price
	Outstanding at December 31, 2013		2,467	$	3.55
	Granted		213	$	3.9
	Exercised		--	$	--
	Cancelled		--	$	--
	Outstanding at March 31, 2014		2,680	$	3.58
	The grant date fair value of options granted during the first three months of 2014 were estimated on the grant date using a trinomial lattice option-pricing model and the following assumptions: expected volatility of 53%, expected term of between 3-5 years, risk-free interest rate of 0.6%, and expected dividend yield of 0%.
	Expected volatility is based on a five year average of the historical volatility of the Company's stock. Previous to December 2013 we used a weighted average of our historical volatility combined with a peer group of companies’ volatility, which had openly traded stock options on the options market and weighted to percentages relative to our stock and the peer group at a 50%/50% weighting. The risk-free rate is based on the rate of U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of the options. The Company uses historical data to estimate pre-vesting forfeiture rates.
	During the three months ended March 31, 2014, we issued no common shares in exchange for stock options.

INCOME_TAXES

INCOME TAXES	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
NOTE 8. INCOME TAXES	'
	While we are subject to U.S. federal income tax as well as income tax of certain state jurisdictions, during the three months ended March 31, 2014, our current provision was zero because the net effect of our permanent and temporary differences resulted in us recognizing a loss for tax purposes. However, for the three month period ended March 31, 2014, permanent differences related to fair value adjustments resulted in us recognizing a gain for tax purposes and our current provision of approximately $38,000. At March 31, 2014, we have remaining net operating loss carryforwards and other net deferred income tax assets of approximately $8.4 million to reduce future taxable income. Our effective tax rate of (0.4%) for the three months ended March 31, 2014 differed from the statutory tax rates primarily because we recognized certain losses from the fair value adjustments for financial statement purposes that are not expected to reverse (i.e. permanent differences).

COMMITMENTS_CONTINGENCIES_AND_

COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
NOTE 9. COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS	'
	We are obligated under various operating leases for our facilities and certain equipment. The following is a schedule of approximate future minimum lease payments under operating leases having remaining terms in excess of one year as of March 31, 2014 for the calendar years ended December 31, 2014 and 2015 (in thousands):
	2014	$	62
	2015		111
	Thereafter		483
	Total	$	656
	Rent expense approximated $12,000 and $45,000 for the three month periods ending March 31, 2014 and 2013 respectively.
	We have a manufacturing agreement with our Bulgarian supplier which provides for certain contingent payments on our part if we terminate our arrangement prior to July 1, 2014. The remaining contingent liability for the calendar year ending December 31, 2014 is approximately $36,000. The agreement requires one year advance written notice of non-renewal.
	Other future contractual obligations for agreements with initial terms greater than one year and agreements to purchase materials in the normal course of business are summarized as follows (in thousands):
	Description	Years Ending December 31,
		2014		2015		2016		2017		2018		Thereafter
	Employment agreements		1,523		1,411		284		-		-		-
	Purchase commitments		3,099		-		-		-		-		-
	Long-term debt		180		239		239		2,934		-		-
	Total	$	4,802	$	1,650	$	523	$	2,934	$	-	$	-
	Litigation
	Stockholder Derivative Action
	In September 2011, the Company was served in a purported stockholder derivative action that was filed in the United States District Court for the Middle District of Florida against the Company and certain of its present and former officers and directors. The complaint asserts, among other things, breach of fiduciary duties and bad faith in relation to the management of the Company’s business. The complaint seeks, among other things, unspecified compensatory damages and various forms of equitable relief. The allegations in the derivative action appear to be based largely on the January 10, 2011 Livneh counterclaim.
	On March 29, 2012, plaintiffs amended their complaint to remove one of the plaintiffs and replace it with another. The amended complaint asserted essentially the same allegations as the original filing. In May 2012, the Company, together with the individual defendants filed a motion to dismiss the plaintiff’s complaint based, in part, upon the plaintiff’s failure to make demand upon the board as required by applicable law. The motion was denied.
	Since October 2013, the parties have been engaged in a Court-sanctioned mediation process. In the context of the mediation process, the parties have discussed the terms of a potential settlement, however, a definitive agreement has not been signed at this time.
	In the normal course of business, we are subject, from time to time, to legal proceedings, lawsuits and claims. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. If any of these matters arise in the future, it could affect the operating results of any one or more quarters.
	We expense costs of litigation related to contingencies in the periods in which the costs are incurred.
	Concentrations
	Our ten largest customers accounted for approximately 58.7% and 61.3% of net revenues for the three months ended March 31, 2014 and 2013 respectively. For the three months ended March 31, 2014, Arthrex, Inc. accounted for 10.1% of our sales, while for the same three month period ended in 2013, PSS World Medical accounted for 10.8% and McKesson Medical Surgical accounted for 10.6% of our sales.

RELATED_PARTY_TRANSACTION

RELATED PARTY TRANSACTION	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
NOTE 10. RELATED PARTY TRANSACTIONS	'
	A relative of Moshe Citronowicz, Bovie’s Senior Vice President, is considered a related party. Arik Zoran is a consultant of the Company doing business as AR Logic, Inc., which is a consulting firm owned by Arik Zoran, Mr. Citronowicz’s brother. During January 2011, we entered into a three year consulting services agreement with AR Logic that provides for a monthly retainer for engineering support for our existing generator product line and a separate hourly based fee structure for additional consulting related to new product lines. AR Logic was paid consulting fees of approximately $89,000 and $62,600 during the three months ended March 31, 2014 and 2013, respectively.
	A second relative of Mr. Citronowicz is considered a related party. Yechiel Tsitrinovich is also a brother of Mr. Citronowicz, and acts as a consultant to the Company related to research and development of certain products. Mr. Tsitrinovich has a royalty contract with us related to the creation and design of a proprietary technology that is used in some of our generators. Mr. Tsitrinovich was paid a combination of consulting fees and royalties on previous product designs approximating $18,700 and $15,000 for the three months ended March 31, 2014 and 2013, respectively.

LONG_TERM_DEBT

LONG TERM DEBT	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
NOTE 11. LONG TERM DEBT	'
	On March 20, 2014, the Company entered into a transaction with The Bank of Tampa, a Florida banking corporation (“Lender”) wherein Lender extended to the Company a mortgage loan in the principal amount of $3,592,000 (the “Loan”). The obligations under the Loan are secured by a first mortgage and security interest in the Company’s Clearwater, Florida facility as well as an assignment of the Company’s accounts receivable. In addition, the Company pledged and interest in a certificate of deposit in the amount of $898,000 as additional collateral which declines on a pro rata basis as principal is paid. The initial maturity date of the Loan is March 20, 2017; however the Company has an option to extend the maturity date until March 20, 2022.
	Borrowings under the Loan bear interest at LIBOR plus 3.5%, with a fixed monthly principal payment of $19,956.
	The Loan documents contain customary financial covenants, including a covenant that the Company maintains a minimum liquidity of $750,000. Although there is no Debt Service Coverage Ratio (as defined in the Loan Agreement) for the initial term of the Loan, should the Company desire to extend the Loan beyond three years, the Company must maintain a Debt Service Coverage Ratio for each of the preceding four quarters of not less than 1.0 to 1.0. In the event the Loan is extended, the Debt Service Coverage Ratio must not be less than 1.2 to 1.0.
	Simultaneously with the closing of the Loan, the Company redeemed the Industrial Revenue Bonds issued by the Pinellas County Industrial Development Authority and satisfied its obligations to its prior lender, PNC Bank, N.A (“PNC Bank”). In connection with the redemption of the bonds, the Company paid PNC Bank $3,188,332 to satisfy its existing credit facility. In connection with the termination of the interest rates swap agreement with PNC Bank, the Company paid PNC Bank an additional $410,275.

INVENTORIES_Tables

INVENTORIES (Tables)	3 Months Ended
	Mar. 31, 2014
Inventories Tables	'
Schedule of inventory	'
	Inventories are stated at the lower of cost or market. Cost is determined principally on te average cost method. Inventories at March 31, 2014 and December 31, 2013 were as follows (in thousands):
		March 31,			December 31,
		2014			2013
	Raw materials	$	4,979		$	5,470
	Work in process		988			882
	Finished goods		2,732			2,455
	Gross inventories		8,699			8,807
	Less: reserve for obsolescence		(432	)		(392	)
	Net inventories	$	8,267		$	8,415

INTANGIBLE_ASSETS_Tables

INTANGIBLE ASSETS (Tables)	3 Months Ended
	Mar. 31, 2014
Intangible Assets Tables	'
Schedule of intangible assets	'
	At March 31, 2014 and December 31, 2013 intangible assets consisted of the following (in thousands):
		March 31,			December 31,
		2014			2013
	Brand name and trademark (life indefinite)	$	1,510		$	1,510
	Purchased technology (9-17 year life)	$	1,441		$	1,441
	Less: accumulated amortization		(915	)		(866	)
	Purchased technology, net	$	526		$	575

FAIR_VALUE_MEASUREMENTS_Tables

FAIR VALUE MEASUREMENTS (Tables)	3 Months Ended
	Mar. 31, 2014
Fair Value Measurements Tables	'
Activity in Level 3 assets	'
	The following represents a reconciliation of the changes in fair value of warrants measured at fair value using Level 3 inputs during the quarter ended March 31, 2014:
	(in $ thousands)	2013 Investor Warrants		2013 Placement Agent Warrants		2010 Investor Warrants			2010 Placement Agent Warrants		Total
	Balance, December 31, 2013	$	4,599	$	460	$	689		$	1	$	5,749
	Issuances		-		-		-			-		-
	Repurchase of warrants (1)		-		-		(421	)		-		(421	)
	Fair value adjustments:
	Change in fair value		7,670		767		1,151			11		9,599
	Balance, March 31, 2014 (2)	$	12,269	$	1,227	$	1,419		$	12	$	14,927

EARNINGS_PER_SHARE_Tables

EARNINGS PER SHARE (Tables)	3 Months Ended
	Mar. 31, 2014
Earnings Per Share Tables	'
Computation of basic and diluted earnings (loss) per share	'
	The following table provides the computation of basic and diluted earnings per share for the three month periods ending March 31, 2014 and 2013.
		Three Months Ended
		March 31,
	(in thousands, except EPS)	2014			2013
	Net loss attributable to common shareholders	$	(9,811	)	$	(409	)
	Basic weighted average shares outstanding		17,684			17,650
	Effect of potential dilutive securities		--			--
	Diluted weighted average shares outstanding		17,684			17,650
	Basic EPS	$	(0.55	)	$	(0.02	)
	Diluted EPS	$	(0.55	)	$	(0.02	)

STOCKBASED_COMPENSATION_Tables

STOCK-BASED COMPENSATION (Tables)	3 Months Ended
	Mar. 31, 2014
Stock-Based Compensation Tables	'
Activity in stock options	'
	Activity in our stock options during the period ended March 31, 2014 was as follows:
		Number Of		Weighted
		Options		Average
		(in thousands)		Exercise
				Price
	Outstanding at December 31, 2013		2,467	$	3.55
	Granted		213	$	3.9
	Exercised		--	$	--
	Cancelled		--	$	--
	Outstanding at March 31, 2014		2,680	$	3.58

COMMITMENTS_AND_CONTINGENCIES_

COMMITMENTS AND CONTINGENCIES (Tables)	3 Months Ended
	Mar. 31, 2014
Commitments And Contingencies Tables	'
Future minimum lease payments under operating leases	'
	The following is a schedule of approximate future minimum lease payments under operating leases having remaining terms in excess of one year as of March 31, 2014 for the calendar years ended December 31, 2014 and 2015 (in thousands):
	2014	$	62
	2015		111
	Thereafter		483
	Total	$	656
Other future contractual obligations	'
	Other future contractual obligations for agreements with initial terms greater than one year and agreements to purchase materials in the normal course of business are summarized as follows (in thousands):
	Description	Years Ending December 31,
		2014		2015		2016		2017		2018		Thereafter
	Employment agreements		1,523		1,411		284		-		-		-
	Purchase commitments		3,099		-		-		-		-		-
	Long-term debt		180		239		239		2,934		-		-
	Total	$	4,802	$	1,650	$	523	$	2,934	$	-	$	-

INVENTORIES_Details

INVENTORIES (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Inventories Details	'	'
Raw materials	$4,979	$5,470
Work in process	988	882
Finished goods	2,732	2,455
Gross inventories	8,699	8,807
Less: reserve for obsolescence	-432	-392
Net inventories	$8,267	$8,415

INTANGIBLE_ASSETS_Details

INTANGIBLE ASSETS (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014	Mar. 31, 2014
In Thousands, unless otherwise specified			Trade Names [Member]	Trade Names [Member]	Purchased Technology [Member]	Purchased Technology [Member]	Purchased Technology [Member]	Purchased Technology [Member]
							Minimum [Member]	Maximum [Member]
Indefinite-lived intangible assets	'	'	$1,510	$1,510	$1,441	$1,441	'	'
Less: accumulated amortization	'	'	'	'	-915	-866	'	'
Net carrying amount	$526	$575	'	'	$526	$575	'	'
Useful life	'	'	'	'	'	'	'9 years	'17 years

INTANGIBLE_ASSETS_Details_Narr

INTANGIBLE ASSETS (Details Narrative) (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Intangible Assets Details Narrative	'	'
Amortization of Intangible Assets	$49,000	$22,000

FAIR_VALUE_MEASUREMENTS_Detail

FAIR VALUE MEASUREMENTS (Details) (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014
Beginning balance	$5,749
Issuances	'
Repurchase of warrants (1)	-421	[1]
Change in fair value	9,599
Ending Balance	14,927	[2]
2013 Investor Warrants [Member]	'
Beginning balance	4,599
Issuances	'
Repurchase of warrants (1)	'	[1]
Change in fair value	7,670
Ending Balance	12,269	[2]
2013 Placement Agent Warrants [Member]	'
Beginning balance	460
Issuances	'
Repurchase of warrants (1)	'	[1]
Change in fair value	767
Ending Balance	1,227	[2]
2010 Investor Warrants [Member]	'
Beginning balance	689
Issuances	'
Repurchase of warrants (1)	-421	[1]
Change in fair value	1,151
Ending Balance	1,419	[2]
2010 Placement Agent Warrants [Member]	'
Beginning balance	1
Issuances	'
Repurchase of warrants (1)	'	[1]
Change in fair value	11
Ending Balance	$12	[2]
[1]	(1) Represents amount paid to repurchase warrants exercisable into 142,857 shares of common stock, which were initially issued in the April 2010 capital raise transaction.
[2]	(2) The warrants are valued using a trinomial lattice valuation methodology because that model embodies all of the relevant assumptions that address the features underlying these instruments. Significant assumptions used in the model at March 31, 2014 included the market price of our common stock, an expected dividend yield of zero, the remaining period to the expiration date of the warrants, expected volatility of our common stock over the remaining life of the warrants of 53%, estimated based on a review of our historical volatility, and risk-free rates of return of 0.6% based on constant maturity rates published by the U.S. Federal Reserve, applicable to the remaining life of the warrants. We also take into consideration a probability assumption for anti-dilution.

EARNINGS_PER_SHARE_Details

EARNINGS PER SHARE (Details) (USD $)	3 Months Ended
In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Earnings Per Share Details	'	'
Net loss attributable to common shareholders	($9,811)	($409)
Basic weighted average shares outstanding	17,684	17,650
Effect of potential dilutive securities	'	'
Diluted weighted average shares outstanding	17,684	17,650
Basic EPS	($0.55)	($0.02)
Diluted EPS	($0.55)	($0.02)

EARNINGS_PER_SHARE_Details_Nar

EARNINGS PER SHARE (Details Narrative) (USD $)	3 Months Ended
In Millions, except Share data, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Purchase options and warrants	$7,500,000	$900,000
Series A Preferred Stock [Member]	'	'
Antidilutive securities excluded from computation of earnings per share (in shares)	3,500,000	'

STOCKBASED_COMPENSATION_Detail

STOCK-BASED COMPENSATION (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Number of options, outstanding	'
Outstanding, beginning of period (in shares)	2,467
Granted (in shares)	213
Exercised (in shares)	'
Cancelled (in shares)	'
Outstanding, end of period (in shares)	2,680
Weighted average exercise price	'
Outstanding, beginning of period (in dollars per share)	$3.55
Granted (in dollars per share)	$3.90
Exercised (in dollars per share)	'
Cancelled (in dollars per share)	'
Outstanding, end of period (in dollars per share)	$3.58

STOCKBASED_COMPENSATION_Detail1

STOCK-BASED COMPENSATION (Details Narrative) (USD $)	3 Months Ended	12 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Stock-based compensation	$82,000	'
Expected volatility rate	53.00%	'
Risk free interest rate	0.60%	'
Expected dividend yield	0.00%	'
Weighting percentages relative to our stock and the peer group	'	'50%/50%
Minimum [Member]	'	'
Expected term	'3 years	'
Maximum [Member]	'	'
Expected term	'5 years	'

INCOME_TAXES_Details_Narrative

INCOME TAXES (Details Narrative) (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014
Income Taxes Details Narrative	'
Provision for current income taxes	$0
Gain for tax purposes and our current provision	38,000
Net operating loss carryforwards	$8,400,000
Effective tax rate (in hundredths)	0.40%

COMMITMENTS_CONTINGENCIES_AND_1

COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS (Details) (USD $)	Mar. 31, 2014
In Thousands, unless otherwise specified
Future minimum lease payments under operating leases	'
2014	$62
2015	111
Thereafter	483
Total	$656

COMMITMENTS_CONTINGENCIES_AND_2

COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS (Details 1) (USD $)	Mar. 31, 2014
In Thousands, unless otherwise specified
2014	$4,802
2015	1,650
2016	523
2017	2,934
2018	'
Thereafter	'
Employment Agreements [Member]	'
2014	1,523
2015	1,411
2016	284
2017	'
2018	'
Thereafter	'
Purchase Commitments [Member]	'
2014	3,099
2015	'
2016	'
2017	'
2018	'
Thereafter	'
Long Term Debt [Member]	'
2014	180
2015	239
2016	239
2017	2,934
2018	'
Thereafter	'

COMMITMENTS_CONTINGENCIES_AND_3

COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS (Details Narrative) (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Rent expense	$12,000	$45,000
Net revenues	58.70%	61.30%
Arthrex, Inc [Member]	'	'
Customers accounted for sales percentage	10.10%	'
PSS World Medical [Member]	'	'
Customers accounted for sales percentage	'	10.80%
McKesson Medical Surgical [Member]	'	'
Customers accounted for sales percentage	'	10.60%

RELATED_PARTY_TRANSACTION_Deta

RELATED PARTY TRANSACTION (Details Narrative) (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
AR Logic [Member]	'	'
Consulting fees	$89,000	$62,600
Mr.Tsitrinovich [Member]	'	'
Consulting fees	$18,700	$15,000