Apyx Medical (APYX) 10-Q 10 Nov 14 2014 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 10, 2014
Document And Entity Information	'	'
Entity Registrant Name	'BOVIE MEDICAL CORP	'
Entity Central Index Key	'0000719135	'
Document Type	'10-Q	'
Document Period End Date	30-Sep-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	'	17,954,214
Document Fiscal Period Focus	'Q3	'
Document Fiscal Year Focus	'2014	'

CONSOLIDATED_BALANCE_SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Current assets:	'	'
Cash and cash equivalents	$6,135	$7,924
Restricted cash	898	'
Trade accounts receivable, net	2,045	1,990
Inventories, net	6,483	8,415
Current portion of deposits	226	948
Prepaid expenses and other current assets	603	545
Total current assets	16,390	19,822
Property and equipment, net	6,833	7,063
Brand name and trademark	1,510	1,510
Purchased technology and license rights, net	458	575
Deferred income tax assets, net	5,312	3,412
Deposits, net of current portion	163	120
Other assets	625	674
Total assets	31,291	33,176
Current liabilities:	'	'
Accounts payable	1,371	1,060
Accrued payroll	186	172
Accrued vacation	169	200
Current portion of bonds payable	'	72
Current portion of mortgage note payable	239	'
Current portion of settlement	'	541
Accrued and other liabilities	1,156	867
Total current liabilities	3,121	2,912
Mortgage note payable, net of current portion	3,232	'
Bonds payable, net of current portion	'	3,185
Deferred rents	24	'
Derivative liabilities	15,149	5,749
Total liabilities	21,526	11,846
Commitments and Contingencies (see Notes 9 and 11)	'	'
STOCKHOLDER'S EQUITY:	'	'
Series A 6% convertible preferred stock, par value $0.001; 3,500,000 shares authorized and issued; preference in liquidation - $7,336,000	2,927	2,259
Common stock, par value $.001 par value; 40,000,000 shares authorized; 17,978,946 issued and 17,835,867 outstanding on September 30, 2014 and 17,826,336 issued and 17,683,257 outstanding on December 31, 2013, respectively	18	18
Additional paid-in capital	29,214	28,687
Deficit	-22,394	-9,634
Total stockholders' equity	6,838	19,071
Total liabilities and stockholders' equity	$31,291	$33,176

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 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	$7,336,000	$7,336,000
Common stock, par value	$0.00	$0.00
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	17,978,946	17,826,336
Common stock, shares outstanding	17,835,867	17,683,257

CONSOLIDATED_STATEMENTS_OF_OPE

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $)	3 Months Ended		9 Months Ended
In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Consolidated Statements Of Operations	'	'	'	'
Sales	$6,788	$5,794	$20,214	$17,532
Cost of sales	4,869	3,545	13,662	10,902
Gross profit	1,919	2,249	6,552	6,630
Other costs and expenses:	'	'	'	'
Research and development	368	291	1,019	938
Professional services	142	512	686	1,348
Salaries and related costs	1,653	751	3,980	2,376
Selling, general and administrative	2,123	1,170	4,923	3,717
Legal award	'	'	'	1,041
Total other costs and expenses	4,286	2,724	10,608	9,420
Loss from operations	-2,367	-475	-4,056	-2,790
Interest expense, net	-41	-54	-111	-171
Change in fair value of liabilities, net	-1,676	13	-9,820	17
Loss before income taxes	-4,084	-516	-13,987	-2,944
Benefit for income taxes, net	1,350	175	1,895	1,074
Net loss	-2,734	-341	-12,092	-1,870
Accretion on convertible preferred stock	-242	'	-668	'
Net loss attributable to common shareholders	($2,976)	($341)	($12,760)	($1,870)
Loss per share	'	'	'	'
Basic	($0.17)	($0.02)	($0.72)	($0.11)
Diluted	($0.17)	($0.02)	($0.72)	($0.11)
Weighted average number of shares outstanding- basic	17,780	17,678	17,727	17,666
Weighted average number of shares outstanding - dilutive	17,780	17,678	17,727	17,666

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)	$22,859
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	'	'	'
Options exercised, Shares	183	'	'	'
Options exercised, Amount	'	381	'	381
Stock based compensation	'	279	'	279
Stock swap to acquire options, Shares	-31	'	'	'
Stock swap to acquire options, Amount	'	-133	'	-133
Accretion on convertible preferred stock	'	'	-668	-668
Net income (loss)	'	'	-12,092	-12,092
Ending Balance, Amount at Sep. 30, 2014	$18	$29,214	($22,394)	$6,838
Ending Balance, Shares at Sep. 30, 2014	17,836	'	'	'

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities	'	'
Net loss	($12,092)	($1,870)
Adjustments to reconcile net loss to net cash used in operating activities:	'	'
Depreciation and amortization	656	620
Provision for inventory obsolescence	985	40
Gain on disposal of property and equipment, net	11	-3
Stock-based compensation	278	348
Change in fair value of liabilities	9,820	-17
(benefit) for deferred taxes	-1,900	-1,075
Changes in current assets and liabilities:	'	'
Trade receivables	-56	778
Prepaid expenses	-58	277
Inventories	947	-1,022
Deposits and other assets	729	-363
Accounts payable	311	368
Accrued and other liabilities	-246	730
Net cash used in operating activities	-615	-1,189
Cash flows from investing activities	'	'
Purchases of property and equipment	-319	-417
Net cash used in investing activities	-319	-417
Cash flows from financing activities	'	'
Proceeds from stock options exercised	249	48
Change in restricted cash	-898	'
Proceeds from mortgage note payable	3,472	-103
Repayment of industrial revenue bonds	-3,257	'
Repurchase of warrants	-421	'
Net cash used in financing activities	-855	-55
Net change in cash and cash equivalents	-1,789	-1,661
Cash and cash equivalents, beginning of period	7,924	4,162
Cash and cash equivalents, end of period	6,135	2,501
Cash paid during the nine months ended September 30, 2014 and 2013 for:	'	'
Interest	111	171
Income taxes	'	'

BASIS_OF_PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
NOTE 1. BASIS OF PRESENTATION	'
	Unless the context otherwise indicates, the terms “Company”, “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	9 Months Ended
	Sep. 30, 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 September 30, 2014 and December 31, 2013 were as follows (in thousands):
		September 30,			December 31,
		2014			2013
	Raw materials	$	4,444		$	5,470
	Work in process		1,634			882
	Finished goods		1,734			2,455
	Gross inventories		7,812			8,807
	Less: reserve for obsolescence		(1,329	)		(392	)
	Net inventories	$	6,483		$	8,415
	For the period ended September 30, 2014, we recorded a charge of approximately $189,000 to excess and obsolete inventory, attributable to scrap associated with RoHS compliance mandates in the European Union, and other product line adjustments.
	During the third quarter of 2014, a physical count of consigned inventory was conducted at a Bulgarian supplier and identified an adjustment of approximately $607,000. The Company recorded this charge in the current reported period. The Company believes this adjustment was due to calculating raw material consumed during the manufacturing process at less than full cost. Management concluded that the effect of the third quarter adjustment was not material to the Company’s previously reported quarterly and full-year 2013 financial statements, as well as to the current years previously reported results of operations and financial position.

INTANGIBLE_ASSETS

INTANGIBLE ASSETS	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
NOTE 3. INTANGIBLE ASSETS	'
	At September 30, 2014 and December 31, 2013 intangible assets consisted of the following (in thousands):
		September 30,			December 31,
		2014			2013
	Trade name (life indefinite)	$	1,510		$	1,510
	Purchased technology (9-17 yr life)	$	1,441		$	1,441
	Less: accumulated amortization		(984	)		(866	)
	Net carrying amount	$	458		$	575
	License rights (5 yr life)	$	316		$	316
	Less accumulated amortization		(316	)		(316	)
	Net carrying amount	$	-		$	-
	Amortization of intangibles, which is included in depreciation and amortization in the accompanying statements of cash flows, was approximately $118,000 and $66,300 during the respective nine month periods ended September 30, 2014 and 2013.

NEW_ACCOUNTING_PRONOUNCEMENTS

NEW ACCOUNTING PRONOUNCEMENTS	9 Months Ended
	Sep. 30, 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	9 Months Ended
	Sep. 30, 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, Fair Value Measurements. FASB ASC Topic 820 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 nine months ended September 30, 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	)
	Change in fair value			8,017		801		996			7		9,821
	Balance, September 30, 2014 (2)		$	12,616	$	1,261	$	1,264		$	8	$	15,149
		-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 September 30, 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 55.17%, 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	9 Months Ended
	Sep. 30, 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 (warrants and stock options). The following table provides the computation of basic and diluted earnings per share for the three and nine month periods ending September 30, 2014 and 2013.
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
	(in thousands, except EPS)	2014			2013			2014			2013
	Net loss attributable to common shareholders	$	(2,976	)	$	(341	)	$	(12,760	)	$	(1,870	)
	Basic weighted average shares outstanding		17,780			17,678			17,727			17,666
	Effect of potential dilutive securities		-			-			-			-
	Diluted weighted average shares outstanding		17,780			17,678			17,727			17,666
	Basic EPS		(0.17	)		(0.02	)		(0.72	)		(0.11	)
	Diluted EPS		(0.17	)		(0.02	)		(0.72	)		(0.11	)
	For the nine months ended September 30, 2014, and 2013, options and warrants to purchase approximately 2,945,591 and 1,000,000 shares of common stock, respectively, were excluded from the computation of diluted earnings per share because their effect were anti-dilutive.

STOCKBASED_COMPENSATION

STOCK-BASED COMPENSATION	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
NOTE 7. STOCK-BASED COMPENSATION	'
	Under our 2012 equity incentive 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 trinomial 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 and nine months ended September 30, 2014, we expensed $127,612 and $278,166, respectively, in stock-based compensation.
	Activity in our stock options during the period ended September 30, 2014 was as follows:
		Number of Options (in thousands)			Weighted Average Exercise Price
	Outstanding at December 31, 2013		2,467		$	3.55
	Granted		467		$	3.88
	Exercised		(97	)	$	2.16
	Cancelled		(163	)	$	4.97
	Outstanding at September 30, 2014		2,674		$	3.66
	The grant date fair value of options granted during the first nine months of 2014 were estimated on the grant date using a trinomial lattice option-pricing model and the following assumptions: expected volatility of between 53% and 54%, 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 nine months ended September 30, 2014, we issued 25,518 common shares in exchange for 50,000 non-employee stock options and 24,482 common shares (via a stock swap). We issued 6,379 common shares in exchange for 12,500 employee stock options and 6,121 common shares (via a stock swap). We issued 35,000 common shares in exchange for 35,000 non-employee stock options. Net proceeds from the issuance of common shares along with the shares received in the stock swap exercises were $77,350 for the nine months ended September 30, 2014.

INCOME_TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
NOTE 8. INCOME TAXES	'
	The Company’s income benefit was approximately $1.35 million and $1.90 million with an effective income tax rate of 33% and 13.6% for three and nine months ended September 30, 2014, respectively. The Company’s effective tax rate differs from the statutory rate due primarily to the recognition of certain losses from the fair value adjustments on the financial statements that are not deductible for tax purposes.
	The Company is subject to U.S. federal income tax as well as income tax in multiple state jurisdictions. The 2011 through 2013 U.S. federal income tax returns are subject to IRS examination. State income tax returns are subject to examination for the 2010 through 2013 tax years.

COMMITMENTS_CONTINGENCIES_AND_

COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS	9 Months Ended
	Sep. 30, 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 September 30, 2014 for the calendar years ended December 31, 2014 and 2015 (in thousands):
	2014	$	55
	2015		104
	Therafter		444
	Total	$	603
	Rent expense approximated $41,000 and $117,000 for the nine month periods ending September 30, 2014 and 2013 respectively.
	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
	Purchase commitments	$	3,375	$	-	$	-	$	-	$	-	$	-
	Long-term debt		60		239		239		2,934		-		-
	Total	$	3,435	$	239	$	239	$	2,934	$	-	$	-
	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, 2015. The remaining contingent liability for the calendar year ending December 31, 2014 is approximately $226,676. The agreement requires one year advance written notice of non-renewal.
	Litigation
	Stockholder Derivative Action
	In September 2011, the Company was served in a purported stockholder derivative action (the “Derivative Action”) that was filed in the United States District Court for the Middle District of Florida (the “Court”) against the Company and certain of its present and former officers and directors. The complaint asserted, among other things, breach of fiduciary duties and bad faith in relation to the management of the Company’s business. The complaint sought, among other things, unspecified compensatory damages and various forms of equitable relief. The allegations in the Derivative Action appear to be based largely on counterclaims previously asserted by Steven Livneh, a former director of the Company, in a prior litigation between the Company and Mr. Livneh which was settled.
	On June 26, 2014, the Company entered into a Stipulation and Agreement of Settlement (“Stipulation of Settlement”) setting forth the terms of the settlement of the claims asserted against the Company in the Derivative Action. On July 7, 2014, the Court issued an Amended Order Preliminarily Approving Derivative Settlement and Providing for Notice (“Preliminary Order”) preliminarily approving the Stipulation of Settlement. On October 2, 2014, the Court entered an order and final judgement approving the Stipulation of Settlement.
	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 62.2% and 60.8% of net revenues for the nine months ended September 30, 2014 and 2013 respectively. For the nine months ended September 30, 2014, one customer accounted for 12.2% of our sales, while for the same nine month period ended in 2013, our three largest customers accounted for 11.8%, 11.7% and 10.5% of our sales. At September 30, 2014, three customers accounted for more than 10% of our accounts receivable and accounted for approximately 35.4% of our total accounts receivable in aggregate.

RELATED_PARTY_TRANSACTION

RELATED PARTY TRANSACTION	9 Months Ended
	Sep. 30, 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. On March 1, 2013 the Company amended the Consulting Services Agreement dated January 2011, extending the term of the existing agreement until December 31, 2014. The agreement shall automatically renew for additional one year periods, unless either party gives written notice of its desire not to renew at least one year prior to the expiration of the initial Term or renewal term. The agreement with AR Logic 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 $213,100 and $188,100 during the nine months ended September 30, 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 $56,760 and $57,000 for the nine months ended September 30, 2014 and 2013, respectively.

LONG_TERM_DEBT

LONG TERM DEBT	9 Months Ended
	Sep. 30, 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 an interest in a certificate of deposit in the amount of $898,000 as additional collateral which declines annually 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 consecutive 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)	9 Months Ended
	Sep. 30, 2014
Inventories Tables	'
Schedule of inventory	'
	Inventories are stated at the lower of cost or market. Cost is determined principally on the average cost method. Inventories at September 30, 2014 and December 31, 2013 were as follows (in thousands):
		September 30,			December 31,
		2014			2013
	Raw materials	$	4,444		$	5,470
	Work in process		1,634			882
	Finished goods		1,734			2,455
	Gross inventories		7,812			8,807
	Less: reserve for obsolescence		(1,329	)		(392	)
	Net inventories	$	6,483		$	8,415

INTANGIBLE_ASSETS_Tables

INTANGIBLE ASSETS (Tables)	9 Months Ended
	Sep. 30, 2014
Intangible Assets Tables	'
Schedule of intangible assets	'
	At September 30, 2014 and December 31, 2013 intangible assets consisted of the following (in thousands):
		September 30,			December 31,
		2014			2013
	Trade name (life indefinite)	$	1,510		$	1,510
	Purchased technology (9-17 yr life)	$	1,441		$	1,441
	Less: accumulated amortization		(984	)		(866	)
	Net carrying amount	$	458		$	575
	License rights (5 yr life)	$	316		$	316
	Less accumulated amortization		(316	)		(316	)
	Net carrying amount	$	-		$	-

FAIR_VALUE_MEASUREMENTS_Tables

FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Sep. 30, 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 nine months ended September 30, 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	)
	Change in fair value		8,017		801		996			7		9,821
	Balance, September 30, 2014 (2)	$	12,616	$	1,261	$	1,264		$	8	$	15,149

EARNINGS_PER_SHARE_Tables

EARNINGS PER SHARE (Tables)	9 Months Ended
	Sep. 30, 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 and nine month periods ending September 30, 2014 and 2013.
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
	(in thousands, except EPS)	2014			2013			2014			2013
	Net loss attributable to common shareholders	$	(2,976	)	$	(341	)	$	(12,760	)	$	(1,870	)
	Basic weighted average shares outstanding		17,780			17,678			17,727			17,666
	Effect of potential dilutive securities		-			-			-			-
	Diluted weighted average shares outstanding		17,780			17,678			17,727			17,666
	Basic EPS		(0.17	)		(0.02	)		(0.72	)		(0.11	)
	Diluted EPS		(0.17	)		(0.02	)		(0.72	)		(0.11	)

STOCKBASED_COMPENSATION_Tables

STOCK-BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2014
Stock-Based Compensation Tables	'
Activity in stock options	'
	Activity in our stock options during the period ended September 30, 2014 was as follows:
		Number of Options (in thousands)			Weighted Average Exercise Price
	Outstanding at December 31, 2013		2,467		$	3.55
	Granted		467		$	3.88
	Exercised		(97	)	$	2.16
	Cancelled		(163	)	$	4.97
	Outstanding at September 30, 2014		2,674		$	3.66

COMMITMENTS_AND_CONTINGENCIES_

COMMITMENTS AND CONTINGENCIES (Tables)	9 Months Ended
	Sep. 30, 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 September 30, 2014 for the calendar years ended December 31, 2014 and 2015 (in thousands):
	2014	$	55
	2015		104
	Therafter		444
	Total	$	603
Other future contractual obligations	'
	Description	Years Ending December 31,
		2014		2015		2016		2017		2018		Thereafter
	Purchase commitments	$	3,375	$	-	$	-	$	-	$	-	$	-
	Long-term debt		60		239		239		2,934		-		-
	Total	$	3,435	$	239	$	239	$	2,934	$	-	$	-

INVENTORIES_Details

INVENTORIES (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Inventories Details	'	'
Raw materials	$4,444	$5,470
Work in process	1,634	882
Finished goods	1,734	2,455
Gross inventories	7,812	8,807
Less: reserve for obsolescence	-1,329	-392
Net inventories	$6,483	$8,415

INVENTORIES_Details_Narrative

INVENTORIES (Details Narrative) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014
Notes to Financial Statements	'
Excess and obsolete inventory	$189
Consigned inventory adjustment	$607

INTANGIBLE_ASSETS_Details

INTANGIBLE ASSETS (Details) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Net carrying amount	$458	$575
Trade Names [Member]	'	'
Indefinite-lived intangible assets	1,510	1,510
Purchased Technology [Member]	'	'
Indefinite-lived intangible assets	1,441	1,441
Less: accumulated amortization	-984	-866
Net carrying amount	485	575
Purchased Technology [Member] | Minimum [Member]	'	'
Useful life	'9 years	'
Purchased Technology [Member] | Maximum [Member]	'	'
Useful life	'17 years	'
License Rights [Member]	'	'
Indefinite-lived intangible assets	316	316
Less: accumulated amortization	-316	-316
Net carrying amount	'	'
Useful life	'5 years	'

INTANGIBLE_ASSETS_Details_Narr

INTANGIBLE ASSETS (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Intangible Assets Details Narrative	'	'
Amortization of Intangible Assets	$118,000	$66,300

FAIR_VALUE_MEASUREMENTS_Detail

FAIR VALUE MEASUREMENTS (Details) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014
Beginning balance	$5,749
Repurchase of warrants	-421	[1]
Change in fair value	9,821
Ending Balance	15,149	[2]
2013 Investor Warrants [Member]	'
Beginning balance	4,599
Repurchase of warrants	'	[1]
Change in fair value	8,017
Ending Balance	12,616	[2]
2013 Placement Agent Warrants [Member]	'
Beginning balance	460
Repurchase of warrants	'	[1]
Change in fair value	801
Ending Balance	1,261	[2]
2010 Investor Warrants [Member]	'
Beginning balance	689
Repurchase of warrants	-421	[1]
Change in fair value	996
Ending Balance	1,264	[2]
2010 Placement Agent Warrants [Member]	'
Beginning balance	1
Repurchase of warrants	'	[1]
Change in fair value	7
Ending Balance	$8	[2]
[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 September 30, 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 55.17%, 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		9 Months Ended
In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Earnings Per Share Details	'	'	'	'
Net income (loss)	($2,976)	($341)	($12,760)	($1,870)
Basic weighted average shares outstanding	17,780	17,678	17,727	17,666
Effect of potential dilutive securities	'	'	'	'
Diluted weighted average shares outstanding	17,780	17,678	17,727	17,666
Basic earnings (loss) per share	($0.17)	($0.02)	($0.72)	($0.11)
Diluted earnings (loss) per share	($0.17)	($0.02)	($0.72)	($0.11)

EARNINGS_PER_SHARE_Details_Nar

EARNINGS PER SHARE (Details Narrative)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Earnings Per Share Details Narrative	'	'
Common stock options and warrants	2,945,591	1,000,000

STOCKBASED_COMPENSATION_Detail

STOCK-BASED COMPENSATION (Details) (USD $)	9 Months Ended
	Sep. 30, 2014
Number of options, outstanding	'
Outstanding, beginning of period (in shares)	2,467
Granted (in shares)	467
Exercised (in shares)	-97
Cancelled (in shares)	-163
Outstanding, end of period (in shares)	2,674
Weighted average exercise price	'
Outstanding, beginning of period (in dollars per share)	$3.55
Granted (in dollars per share)	$3.88
Exercised (in dollars per share)	$2.16
Cancelled (in dollars per share)	$4.97
Outstanding, end of period (in dollars per share)	$3.66

STOCKBASED_COMPENSATION_Detail1

STOCK-BASED COMPENSATION (Details Narrative) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014
Stock-based compensation	$127,612	$278,166
Risk free interest rate	'	0.60%
Expected dividend yield	'	0.00%
Net proceeds from the issuance of common	'	$77,350
Non Employee Stock [Member]	'	'
Common shares issued	'	25,518
Common stock option in exchange	'	50,000
Common share for stock swap	'	24,482
Net issued shares	'	35,000
Employee Stock [Member]	'	'
Common shares issued	'	6,379
Common stock option in exchange	'	12,500
Common share for stock swap	'	6,121
Net issued shares	'	35,000
Minimum [Member]	'	'
Expected volatility rate	'	53.00%
Expected term	'	'3 years
Maximum [Member]	'	'
Expected volatility rate	'	54.00%
Expected term	'	'5 years

INCOME_TAXES_Details_Narrative

INCOME TAXES (Details Narrative) (USD $)	3 Months Ended	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2014
Income Taxes Details Narrative	'	'
Income benefit	$135	$190
Effective tax rate (in hundredths)	33.00%	13.60%

COMMITMENTS_CONTINGENCIES_AND_1

COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS (Details) (USD $)	Sep. 30, 2014
In Thousands, unless otherwise specified
Future minimum lease payments under operating leases	'
2014	$55
2015	104
Thereafter	444
Total	$603

COMMITMENTS_CONTINGENCIES_AND_2

COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS (Details 1) (USD $)	Sep. 30, 2014
In Thousands, unless otherwise specified
2014	$3,435
2015	239
2016	239
2017	2,934
2018	'
Thereafter	'
Purchase Commitments [Member]	'
2014	3,375
2015	'
2016	'
2017	'
2018	'
Thereafter	'
Long Term Debt [Member]	'
2014	60
2015	239
2016	239
2017	2,934
2018	'
Thereafter	'

COMMITMENTS_CONTINGENCIES_AND_3

COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS (Details Narrative) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Rent expense	$41	$117
Net revenues	62.20%	60.80%
Customers accounts receivable	10.00%	'
Accounts receivable in aggregate	35.40%	'
Customer [Member]	'	'
Customers accounted for sales percentage	12.20%	'
One Customer [Member]	'	'
Customers accounted for sales percentage	11.80%	'
Two Customer [Member]	'	'
Customers accounted for sales percentage	11.70%	'
Three Customer [Member]	'	'
Customers accounted for sales percentage	10.50%	'

RELATED_PARTY_TRANSACTION_Deta

RELATED PARTY TRANSACTION (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
AR Logic [Member]	'	'
Consulting fees	$213,100	$188,100
Mr.Tsitrinovich [Member]	'	'
Consulting fees	$56,760	$57,000