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Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2011	Mar. 28, 2012	Jun. 30, 2011
Document And Entity Information [Abstract]
Entity Registrant Name	SAFESTITCH MEDICAL, INC.
Entity Central Index Key	0000876378
Document Type	10-K
Document Period End Date	Dec. 31, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 7.8
Entity Common Stock, Shares Outstanding		48,797,755

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2011	Dec. 31, 2010
CURRENT ASSETS
Cash and cash equivalents	$ 298	$ 3,032
Other receivable - related-party	66	64
Prepaid Expenses	143	117
Inventory	0	91
Total Current Assets	507	3,304
FIXED ASSETS
Property and equipment, net	470	337
OTHER ASSETS
Security deposits	2	2
Deferred financing costs, net	14	51
Total Other Assets	16	53
TOTAL ASSETS	993	3,694
CURRENT LIABILITIES
Accounts payable and accrued liabilities	469	221
Notes payable	0	49
Total Current Liabilities	469	270
Stockholders loans including accrued interest	2,523	0
Commitments and contingencies (Note 9)
STOCKHOLDERS' (DEFICIT) EQUITY
Preferred stock, $0.01 par value per share, 25,000,000 shares authorized 10% Series A Cumulative Convertible Preferred Stock, 4,000,000 shares authorized, no shares issued and outstanding as of December 31, 2011 and 2010; liquidation preference $0 as of December 31, 2011 and 2010
Common stock, $0.001 par value per share, 225,000,000 shares authorized, 28,003,755 shares issued and outstanding as of December 31, 2011 and 2010	28	28
Additional paid-in capital	20,762	20,427
Deficit accumulated during the development stage	(22,789)	(17,031)
Total Stockholders' (Deficit) Equity	(1,999)	3,424
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY	$ 993	$ 3,694

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2011	Dec. 31, 2010
Stockholder's Equity
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	25,000,000	25,000,000
Aggregate preferred stock liquidation preference	$ 0	$ 0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	225,000,000	225,000,000
Common stock, shares issued	28,003,755	28,003,755
Common Stock, shares outstanding	28,003,755	28,003,755
10% Cumulative Convertible Preferred Stock
Stockholder's Equity
Preferred stock, shares authorized	4,000,000	4,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Rate of cumulative convertible preferred stock	10.00%	10.00%

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended		76 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2011
Revenues
Costs and expenses
Research and development	3,367	2,728	12,938
Selling, General and administrative	2,306	2,617	8,995
Total costs and expenses	5,673	5,345	21,933
Loss from operations	(5,673)	(5,345)	(21,933)
Other income and (expense)
Other income		244	1,147
Interest income		2	79
Amortization of deferred financing costs	(37)	(204)	(1,970)
Interest expense	(48)		(112)
Total other income and (expense)	(85)	42	(856)
Loss before income tax	(5,758)	(5,303)	(22,789)
Provision for income tax
Net loss	(5,758)	(5,303)	(22,789)
Loss attributable to common stockholders and loss per common share:
Net loss	(5,758)	(5,303)	(22,789)
Loss attributable to common stockholders	$ (5,758)	$ (10,382)	(28,156)
Weighted average shares outstanding, basic and diluted	28,004	22,230
Net loss per basic and diluted share	$ (0.21)	$ (0.47)
Series A Preferred Conversion
Loss attributable to common stockholders and loss per common share:
Deemed dividend		$ (4,301)	(4,301)
Series A Preferred Stock
Loss attributable to common stockholders and loss per common share:
Deemed dividend		(500)	(700)
Declared/Accrued Dividends - Series A Preferred Stock		$ (278)	$ (366)

Consolidated Statements of Stockholder's Equity (Deficit) - USD ($) shares in Thousands, $ in Thousands	Total	Preferred Stock	Preferred Stock Series A Preferred Stock	Preferred Stock Series A Preferred Conversion	Common Stock	Additional Paid-in Capital	Deficit Accumulated During the Development Stage
Beginning Balance at Sep. 14, 2005	$ 0	$ 0			$ 0	$ 0	$ 0
Beginning Balance, Shares at Sep. 14, 2005		0			0
Capital contributed	1					1
Net loss	(76)						(76)
Ending Balance at Dec. 31, 2005	(75)	$ 0			$ 0	1	(76)
Ending Balance, Shares at Dec. 31, 2005		0			0
Beginning Balance at Sep. 14, 2005	0	$ 0			$ 0	0	0
Beginning Balance, Shares at Sep. 14, 2005		0			0
Net loss	(22,789)
Ending Balance at Dec. 31, 2011	(1,999)	$ 0			$ 28	20,762	(22,789)
Ending Balance, Shares at Dec. 31, 2011		0			28,004
Beginning Balance at Dec. 31, 2005	(75)	$ 0			$ 0	1	(76)
Beginning Balance, Shares at Dec. 31, 2005		0			0
Capital contributed	1,504				$ 11	1,493
Capital contributed, Shares					11,256
Net loss	(1,060)						(1,060)
Ending Balance at Dec. 31, 2006	369	$ 0			$ 11	1,494	(1,136)
Ending Balance, Shares at Dec. 31, 2006		0			11,256
Exercise of option (CTS)-September 23, 2007 at $0.79 per share	35					35
Exercise of option (CTS)-September 23, 2007 at $0.79 per share, Shares					42
Stock based compensation-September 4, 2007	77					77
Issuance of shares in recapitalization - September 4, 2007 at $0.64 per share	3,083				$ 5	3,078
Issuance of shares in recapitalization, Shares					4,795
SafeStitch expenses associated with recapitalization	(156)					(156)
Stock-based compensation	65					65
Warrants issued in connection with credit facility-September 4, 2007 at 2.46 per share	1,985					1,985
Rule 16 payment received	4					4
Net loss	(3,041)						(3,041)
Ending Balance at Dec. 31, 2007	2,421	$ 0			$ 16	6,582	(4,177)
Ending Balance, Shares at Dec. 31, 2007		0			16,093
Issuance of common shares in private offering	3,988				$ 2	3,986
Issuance of common shares in private offering, Shares					1,862
Issuance of common shares as repayment of stockholder note per share	10					10
Issuance of common shares as repayment of stockholder note per share, Shares					8
Stock-based compensation	239					239
Net loss	(5,185)						(5,185)
Ending Balance at Dec. 31, 2008	1,473	$ 0			$ 18	10,817	(9,362)
Ending Balance, Shares at Dec. 31, 2008		0			17,963
Issuance of Series A Preferred Stock, net of offering costs	1,982		$ 20			1,962
Issuance of Series A Preferred Stock, net of offering costs , shares			2,000
Fair value of beneficial conversion feature of Series A Preferred Stock	200					200
Deemed dividend to Series A Preferred Stockholders, charged to additional paid-in capital in the absence of retained earnings	(200)					(200)
Stock-based compensation	195					195
Net loss	(2,366)						(2,366)
Ending Balance at Dec. 31, 2009	1,284	$ 20			$ 18	12,974	(11,728)
Ending Balance, Shares at Dec. 31, 2009		2,000			17,963
Issuance of Series A Preferred Stock, net of offering costs	1,998		$ 20			1,978
Issuance of Series A Preferred Stock, net of offering costs , shares			2,000
Fair value of beneficial conversion feature of Series A Preferred Stock	500					500
Deemed dividend to Series A Preferred Stockholders, charged to additional paid-in capital in the absence of retained earnings	(500)					(500)
Issuance of common shares in private offering	4,974				$ 5	4,969
Issuance of common shares in private offering, Shares					4,978
Conversion of shares of Series A Preferred Stock and accumulated dividends into shares of Common Stock				$ (40)	$ 4	36
Conversion of shares of Series A Preferred Stock and accumulated dividends into shares of Common Stock , shares				(4,000)	4,366
Issuance of shares of Common Stock as Consideration Shares					$ 1	(1)
Issuance of shares of Common Stock as Consideration Shares , shares					697
Intrinsic value of aggregate shares of Common Stock issued on conversion of Series A Preferred Stock	4,301					4,301
Dividend paid to Series A Preferred Stockholders on conversion, charged to additional paid-in capital in the absence of retained earnings	(4,301)					(4,301)
Stock-based compensation	471					471
Net loss	(5,303)						(5,303)
Ending Balance at Dec. 31, 2010	3,424	$ 0			$ 28	20,427	(17,031)
Ending Balance, Shares at Dec. 31, 2010		0			28,004
Stock-based compensation	335					335
Net loss	(5,758)						(5,758)
Ending Balance at Dec. 31, 2011	$ (1,999)	$ 0			$ 28	$ 20,762	$ (22,789)
Ending Balance, Shares at Dec. 31, 2011		0			28,004

Consolidated Statement of Stockholder's Equity (Deficit) (Parenthetical) - $ / shares shares in Thousands	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007
Exercise of options				$ 0.79
Issuance of per share recapitalization				0.64
Warrants issued with credit facility				2.46
Repayment of stockholder related to Issuance of common shares			$ 1.22
Series A Preferred Stock
Issuance of Series A Preferred Stock	$ 1.00	$ 1.00
Series A Preferred Conversion
Intrinsic value of aggregate shares of Common Stock issued on conversion of Series A Preferred Stock	5,063
Preferred Stock \| Series A Preferred Stock
Issuance of Series A Preferred Stock	$ 1.00	1.00
Common Stock
Issuance of per share recapitalization				0.64
Repayment of stockholder related to Issuance of common shares			1.22
Additional Paid-in Capital
Exercise of options				0.79
Issuance of per share recapitalization				0.64
Warrants issued with credit facility				$ 2.46
Repayment of stockholder related to Issuance of common shares			$ 1.22
Additional Paid-in Capital \| Series A Preferred Stock
Issuance of Series A Preferred Stock	$ 1.00	$ 1.00
Additional Paid-in Capital \| Series A Preferred Conversion
Intrinsic value of aggregate shares of Common Stock issued on conversion of Series A Preferred Stock	5,063

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended		76 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2011
OPERATING ACTIVITIES
Net loss	$ (5,758)	$ (5,303)	$ (22,789)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of deferred finance costs	37	204	1,970
Stock-based compensation expense	335	471	1,305
Stock-based compensation expense related to Share Exchange			77
Depreciation and amortization	140	87	342
Gain on sale of TruePosition investment			(903)
Loss from disposal of assets	20		20
Inventory disposals	86	53	139
Changes in operating assets and liabilities
Other current assets	(28)	(29)	(189)
Inventory	5	(144)	(139)
Other assets			(2)
Accounts payable and accrued liabilities	248	128	185
Accrued interest	48		48
NET CASH USED IN OPERATING ACTIVITIES	(4,867)	(4,533)	(19,936)
INVESTING ACTIVITIES
Purchase of equipment	(293)	(277)	(832)
Proceeds from sale of TruePosition investment			903
Payment received under Rule 16b			4
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES	(293)	(277)	75
FINANCING ACTIVITIES
Net cash provided in connection with the acquisition of SafeStitch LLC			3,192
Issuance of Common Stock, net of offering costs		4,974	8,962
Issuance of Preferred Stock, net of offering costs		1,998	3,980
Capital Contributions			1,431
Proceeds from notes payable		70	141
Repayment of notes payable	(49)	(71)	(141)
Proceeds from stockholder loans	2,475		5,335
Repayment of stockholder loans			(2,776)
Exercise of options			35
NET CASH PROVIDED BY FINANCING ACTIVITIES	2,426	6,971	20,159
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(2,734)	2,161	298
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	3,032	871
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$ 298	3,032	298
Supplemental disclosures:
Cash paid for interest			64
Non cash activities:
Non-cash dividend upon issuance and conversion of Preferred Stock		4,801	5,001
Dividends		$ 366	366
Stockholder loans contributed to capital			84
Warrants issued in connection with credit facility			$ 1,985

Basis of Presentation and Liquidity

12 Months Ended

Dec. 31, 2011

Basis of Presentation and Liquidity [Abstract]

BASIS OF PRESENTATION AND LIQUIDITY

NOTE 1—BASIS OF PRESENTATION AND LIQUIDITY

SafeStitch Medical, Inc. (together with its consolidated subsidiaries, “SafeStitch” or the “Company”) is a developmental stage medical device company focused on the development of medical devices that manipulate tissues for endoscopic and minimally invasive surgery for the treatment of obesity, gastroesophageal reflux disease (“GERD”), Barrett’s Esophagus, esophageal obstructions, upper gastrointestinal bleeding, hernia formation and other intraperitoneal abnormalities.

Cellular Technical Services Company, Inc. (“Cellular”), a non-operating public company, was incorporated in 1988 as NCS Ventures Corp. under the laws of the State of Delaware. On July 25, 2007, Cellular entered into a Share Transfer, Exchange and Contribution Agreement (the “Share Exchange”) with SafeStitch LLC, a Virginia limited liability company. On September 4, 2007, Cellular acquired all of the members’ equity interests in SafeStitch LLC in exchange for 11,256,369 shares of Cellular’s common stock, which represented a majority of Cellular’s outstanding shares immediately following the Share Exchange. Effective January 8, 2008, Cellular changed its name to SafeStitch Medical, Inc. and increased the aggregate number of shares of capital stock that may be issued from 35,000,000 to 250,000,000, comprising 225,000,000 shares of common stock, par value $0.001 per share (the “Common Stock”), and 25,000,000 shares of preferred stock, par value $0.01 per share. For accounting purposes, the acquisition has been treated as a recapitalization of SafeStitch LLC, with SafeStitch LLC as the acquirer (reverse acquisition). The historical financial statements prior to September 4, 2007 are those of SafeStitch LLC, which began operations on September 15, 2005. The accompanying financial statements give retroactive effect to the recapitalization as if it had occurred on September 15, 2005 (inception).

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the period from September 15, 2005 (inception) through December 31, 2011, the Company has accumulated a deficit of $22.8 million, including a net loss of $5.8 million for the year ended December 31, 2011, and has not generated revenue or positive cash flows from operations. The Company has been dependent upon equity financing and loans from stockholders to meet its obligations and sustain operations. The Company’s efforts have been principally devoted to developing its technologies and commercializing its products. Based upon its current cash position, the $8.3 million in proceeds received from the issuance of shares of common stock in February 2012 (see Note 14), availability under the extended term of its $4.0 million line of credit from The Frost Group LLC (“The Frost Group”) and the Company’s President and CEO, Jeffrey G. Spragens (the “Credit Facility”), and by monitoring its discretionary expenditures, management believes that the Company will be able to fund its existing operations through December 31, 2012. However, in order to fund all planned operations, including the commercialization of certain of the Company’s products, including the AMID Stapler^®, and the anticipated expansion in 2012 of clinical trials for certain of the Company’s product candidates, the Company anticipates that additional external financing will be required. If adequate funds are not available, the Company may be required to delay, reduce the scope of or eliminate its research and development programs, reduce its planned commercialization efforts or obtain funds through arrangements with collaborators or others that may require the Company to relinquish rights to certain product candidates that it might otherwise seek to develop or commercialize independently. Although the Company plans to secure additional funds through the issuance of equity and/or debt, no assurance can be given that additional financing will be available to the Company on acceptable terms, or at all. The Company’s ability to continue as a going concern is ultimately dependent upon generating revenues from those products that do not require further marketing clearance by the U.S. Food and Drug Administration (“FDA”), obtaining FDA clearance to market its other product candidates, and achieving profitable operations and generating sufficient cash flows from operations to meet future obligations.

- Definition

The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements.

+ References + Details

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2011

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Isis Tele-Communications, Inc., which has no current operations, and SafeStitch LLC. All inter-company accounts and transactions have been eliminated in consolidation.

Use of estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions, such as useful lives of property and equipment, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents. We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company holds cash and cash equivalent balances in banks and other financial institutions, and includes overnight repurchase agreements collateralizing its depository bank accounts (sweep accounts) in its cash balances. Balances in excess of Federal Deposit Insurance Corporation (“FDIC”) limitations may not be insured.

Allowances for Doubtful Accounts. The Company provides an allowance for receivables it believes it may not collect in full. Receivables are written off when they are deemed to be uncollectible and all collection attempts have ceased. The amount of bad debt recorded each period and the resulting adequacy of the allowance for doubtful accounts at the end of each period are determined using a combination of customer-by-customer analysis of the Company’s accounts receivable each period and subjective assessments of the Company’s future bad debt exposure.

Inventories. Inventories are stated at lower of cost or market using the weighted average cost method. Provisions for potentially obsolete or slow-moving inventory are made based on management’s analysis of inventory levels, obsolescence and future sales forecasts. Obsolete inventory aggregating $86,000 was disposed of during 2011.

Property and equipment. Property and equipment are carried at cost less accumulated depreciation. Major additions and improvements are capitalized, while maintenance and repairs that do not extend the lives of assets are expensed. Gain or loss, if any, on the disposition of fixed assets is recognized currently in operations. Depreciation is calculated primarily on a straight-line basis over estimated useful lives of the assets.

Revenue Recognition. Revenue from product sales is recognized when persuasive evidence of an arrangement exists, the goods are shipped and title has transferred, the price is fixed or determinable, and the collection of the sales proceeds is reasonably assured.

Advertising Costs. The Company expenses all costs of advertising as incurred. Advertising and promotional costs are included in selling, general and administrative (“SG&A”) costs and expenses for all periods presented, and totaled $73,000 and $61,000, respectively, for the years ended December 31, 2011 and 2010.

Research and development. Research and development costs principally represent salaries of the Company’s medical and biomechanical engineering professionals, material and shop costs associated with manufacturing product prototypes and payments to third parties for clinical trials and additional product development and testing. All research and development costs are charged to expense as incurred.

Patent costs. Costs incurred in connection with acquiring patent rights and the protection of proprietary technologies are charged to expense as incurred.

Stock-based compensation. The Company accounts for all share-based payments, including grants of stock options, as operating expenses, based on their grant date fair values. The fair value of the Company’s stock option awards is expensed over the vesting life of the underlying stock options using the graded vesting method, with each tranche of vesting options valued separately. Stock-based compensation is included in general and administrative costs and expenses for all periods presented.

Therapeutic discovery project tax credit. The Company records the therapeutic discovery project tax credit on the accrual basis when approved by the government agency which is reported as other income in the accompanying statements.

Fair value of financial instruments. The carrying amounts of cash and cash equivalents, accounts payable, and accrued expenses approximate fair value based on their short-term maturity.

Long-lived assets. The Company reviews the carrying values of its long-lived assets, including long-term investments, for possible impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. Any long-lived assets held for disposal are reported at the lower of their carrying amounts or fair value less costs to sell.

Income taxes. The Company follows the liability method of accounting for income taxes, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of the assets and liabilities. The Company’s policy is to record a valuation allowance against deferred tax assets, when it is more likely than not the deferred tax asset is not recoverable. The Company considers estimated future taxable income or loss and other available evidence when assessing the need for its deferred tax valuation allowance.

Comprehensive income (loss). Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company’s comprehensive net loss is equal to its net loss for all periods presented.

Property and Equipment

12 Months Ended

Dec. 31, 2011

Property and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 3—PROPERTY AND EQUIPMENT

Property and equipment consists of the following:


	Estimated Useful lives		December 31, 2011			December 31, 2010
Machinery and equipment		5 years	$	660,000		$	452,000
Furniture, fixtures and leasehold improvements		3-5 years		81,000			50,000
Software		3-5 years		57,000			37,000

				798,000			539,000
Accumulated depreciation and amortization				(328,000	)		(202,000	)

Property and equipment, net			$	470,000		$	337,000

Depreciation of fixed assets utilized in research and development activities is included in research and development costs and expenses. All other depreciation is included in general and administrative expense. Depreciation and amortization expense was $140,000 and $87,000 for the years ended December 31, 2011 and 2010, respectively.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

+ References + Details

Stock-Based Compensation

12 Months Ended

Dec. 31, 2011

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

NOTE 4—STOCK-BASED COMPENSATION

The Company granted 88,667 options outside of plans in September 2007 at an exercise price of $2.60 per share. The Company determined the estimated aggregate fair value of these options on the grant date to be $196,000, or approximately $2.21 per option. For the years ended December 31, 2011 and 2010, the Company recorded stock-based compensation expense of $0 and $34,000, respectively, for these options, which is included in general and administrative expense.

On November 13, 2007, the Board of Directors and a majority of the Company’s stockholders approved the SafeStitch Medical, Inc. 2007 Incentive Compensation Plan (the “2007 Plan”), which was amended on June 6, 2011 to increase the number of shares of Common Stock available for issuance thereunder from 2,000,000 to 3,000,000. Under the 2007 Plan, which is administered by the Compensation Committee, the Company may grant stock options, stock appreciation rights, restricted stock and/or deferred stock to employees, officers, directors, consultants and vendors up to an aggregate of 3,000,000 shares of Common Stock, which are fully reserved for future issuance. The exercise price of stock options or stock appreciation rights may not be less than the fair market value of the Common Stock at the date of grant and, within any twelve month period, no person may receive stock options or stock appreciation rights for more than one million shares of Common Stock. Additionally, no stock options or stock appreciation rights granted under the 2007 Plan may have a term exceeding ten years.

The Company granted 562,500 and 750,000 stock options under the 2007 Plan during the years ended December 31, 2011 and 2010, respectively. The options granted during 2011 were issued at an exercise price of $1.12 per share and had an estimated aggregate grant date fair value of $502,000. The options granted during 2010 were issued at exercise prices between $1.10 and $2.00 per share and had an estimated aggregate grant date fair value of $697,000. The weighted average grant date fair value of the options granted during 2011 and 2010 was $0.89 per share and $0.93 per share, respectively. At December 31, 2011, a total of 1,372,000 shares of Common Stock remained available for issuance under the 2007 Plan.

Total stock-based compensation recorded for the years ended December 31, 2011 and 2010 was $335,000 and $471,000, respectively, and is included in general and administrative expense. The stock-based compensation recorded for the year ended December 31, 2011 included a credit of $113,000 for a change in the forfeitures experience. The fair value of the Company’s stock option awards is expensed over the vesting life of the underlying stock options using the graded vesting method, with each tranche of vesting options valued separately. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free interest rate for periods within the contractual life of the stock option award is based on the yield of U.S. Treasury bonds on the grant date with a maturity equal to the expected term of the stock option. The expected life of stock option awards is based upon the “simplified” method for “plain vanilla” options described in SEC Staff Accounting Bulletin No. 107, as amended by SEC Staff Accounting Bulletin No. 110. Forfeiture rates are based on management’s estimates. The fair value of each option granted are estimated on the date of their grant using the Black-Scholes option pricing model using the following assumptions.


	Year ended December 31, 2011	Year ended December 31, 2010
Expected volatility	76.91% – 102.63%	87.09% –108.28%
Expected dividend yield	0.00%	0.00%
Risk-free interest rate	2.25% – 3.25%	.88% – 3.11%
Expected life	5.5 – 10.0 years	4.0 – 7.0 years
Forfeiture rate	0% – 5%	0% – 5%

The following summarizes the Company’s stock option activity for the year ended December 31, 2011:


	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2010		1,334,667		$	1.41		5.74
Granted		562,500		$	1.12		9.20
Exercised		—			—
Canceled or expired		(269,000	)	$	1.19		4.88

Outstanding at December 31, 2011		1,628,167		$	1.35		6.26	$	—

Exercisable at December 31, 2011		864,917		$	1.50		4.98	$	—

Vested and expected to vest at December 31, 2011		1,585,098		$	1.35		6.23	$	—

68,000 of the 562,500 options granted during the year ended December 31, 2011, were vested as of December 31, 2011. At December 31, 2011, there was $242,000 of total unrecognized compensation cost related to non-vested employee and director share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 1.74 years.

No options were exercised during the years ended December 31, 2011 and 2010.

No tax benefits were attributed to the stock-based compensation expense because a valuation allowance was maintained for substantially all net deferred tax assets.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 50
-Section 50
-Paragraph 1
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-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
-Section 50
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-Publisher FASB
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-URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929

+ Details

Debt

12 Months Ended

Dec. 31, 2011

Debt [Abstract]

DEBT

NOTE 5—DEBT

Credit Facility. In connection with the acquisition of SafeStitch LLC, the Company entered into a Note and Security Agreement (the “Credit Facility”) with both The Frost Group and Jeffrey G. Spragens, the Company’s Chief Executive Officer and President and a director. The Frost Group is a Florida limited liability company whose members include Frost Gamma Investments Trust (“Frost Gamma”), a trust controlled by Dr. Phillip Frost, the largest beneficial holder of the issued and outstanding shares of Common Stock, Dr. Jane H. Hsiao, the Company’s Chairman of the Board, and Steven D. Rubin, a director. The Credit Facility provides up to $4.0 million in total available borrowings, consisting of up to $3.9 million from The Frost Group and up to $100,000 from Mr. Spragens. The Company has granted a security interest in all present and subsequently acquired collateral in order to secure prompt, full and complete payment of the amounts outstanding under the Credit Facility. The collateral includes all assets of the Company, inclusive of intellectual property (patents, patent rights, trademarks, service marks, etc.). Outstanding borrowings under the Credit Facility accrue interest at a 10% annual rate. The Credit Facility had an initial term of 28 months, expiring in December 2009, and was amended on four occasions to extend the maturity date, which is now June 30, 2013.

In connection with the Credit Facility, the Company granted warrants to purchase an aggregate of 805,521 shares of its Common Stock to the Frost Group and Mr. Spragens at an assumed exercise price of $0.25 per share. The fair value of the warrants was determined to be approximately $2.0 million on the grant date based on the Black-Scholes valuation model using the following assumptions: expected volatility of 82%, dividend yield of 0%, risk-free interest rate of 4.88% and expected life of 10 years. The fair value of the warrants was recorded as deferred financing costs and is being amortized over the life of the Credit Facility. The Company recorded amortization expense of $37,000 and $204,000 related to these deferred financing costs for the years ended December 31, 2011 and 2010, respectively.

The Company borrowed $2,475,000 under the Credit Facility during the year ended December 31, 2011. The Company recognized interest expense related to the outstanding borrowings under the Credit Facility for the years ended December 31, 2011 and 2010 of $48,000 and $0, respectively. As of December 31, 2011 there was a balance outstanding under the Credit Facility of $2,523,000 (see Note 14), including accrued interest of $48,000, and there was no balance outstanding at December 31, 2010.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References + Details

Capital Transactions

12 Months Ended

Dec. 31, 2011

Capital Transactions [Abstract]

CAPITAL TRANSACTIONS

NOTE 6—CAPITAL TRANSACTIONS

2010 Private Placement of Common Stock. On June 15, 2010, the Company entered into a stock purchase agreement (the “2010 Stock Purchase Agreement”) with 20 investors (the “2010 PIPE Investors”) pursuant to which the 2010 PIPE Investors agreed to purchase an aggregate of 4,978,000 shares of Common Stock (the “PIPE Shares”) at a price of $1.00 per share for aggregate consideration of $4,978,000. Among the 2010 PIPE Investors who purchased a portion of the PIPE Shares were Hsu Gamma Investments, L.P. (“Hsu Gamma”), an entity of which Dr. Jane Hsiao, the Company’s Chairman of the Board, is general partner, Frost Gamma, as well as Grandtime Associates Limited (“Grandtime”), a Taiwan-based investment company. Each of Hsu Gamma, Frost Gamma and Grandtime purchased 1,300,000 PIPE Shares. The Company issued the PIPE Shares in reliance upon the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D promulgated thereunder.

10.0% Series A Cumulative Convertible Preferred Stock. In June 2009, the Company authorized a new series of preferred stock, designated as 10.0% Series A Cumulative Convertible Preferred Stock, par value $0.01 per share (“Series A Preferred Stock”). Holders of the Series A Preferred Stock are entitled to receive, when, as and if declared by the Company’s Board of Directors, dividends on each share of Series A Preferred Stock at a rate per annum equal to 10.0% of the sum of (a) $1.00, plus (b) any and all declared and unpaid and accrued dividends thereon, subject to adjustment for any stock split, combination, recapitalization or other similar corporate action (the “Liquidation Amount”). Holders of the Series A Preferred Stock also have the right to receive notice of any meeting of holders of Common Stock or Series A Preferred Stock and to vote (on an as-converted into Common Stock basis) upon any matter submitted to a vote of the holders of Common Stock or Series A Preferred Stock. With respect to dividend distributions and distributions upon liquidation, winding up or dissolution of the Company, the Series A Preferred Stock ranks senior to all classes of Common Stock and to each other class of the Company’s capital stock existing now or hereafter created that are not specifically designated as ranking senior to or pari passu with the Series A Preferred Stock. The Company may not issue any capital stock that is senior to or pari passu with the Series A Preferred Stock unless such issuance is approved by the holders of at least 66 2/3% of the issued and outstanding Series A Preferred Stock voting separately as a class.

Upon the occurrence of a Liquidation Event (as defined in the Series A Preferred Stock’s Certificate of Designation, which is referred to as the “Certificate of Designation”), holders of Series A Preferred Stock are entitled to be paid, subject to applicable law, out of the assets of the Company available for distribution to its stockholders, an amount in cash (the “Liquidation Payment”) for each share of Series A Preferred Stock equal to the greater of (x) the Liquidation Amount for each share of Series A Preferred Stock outstanding, or (y) the amount for each share of Series A Preferred Stock the holders would be entitled to receive pursuant to the Liquidation Event if all of the shares of Series A Preferred Stock had been converted into Common Stock as of the date immediately prior to the date fixed for determination of stockholders entitled to receive a distribution in such Liquidation Event. Such Liquidation Payment will be paid before any cash distribution will be made or any other assets distributed in respect of any class of securities junior to the Series A Preferred Stock, including, without limitation, Common Stock. The holder of any share of Series A Preferred Stock may at any time and from time to time convert such share into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing (A) the Liquidation Amount of the share by (B) the conversion price, which was initially $1.00, subject to adjustment as provided in the Certificate of Designation. To the extent it is lawfully able to do so, the Company may redeem all of the then outstanding shares of Series A Preferred Stock by paying in cash an amount per share equal to $1.00 plus all declared or accrued unpaid dividends on such shares, subject to adjustment for any stock dividends or distributions, splits, subdivisions, combinations, reclassifications, stock issuances or similar events with respect to the Common Stock.

2009 Issuance of Series A Preferred Stock. On July 21, 2009, the Company entered into a securities purchase agreement with a private investor (the “2009 Investor”), pursuant to which the 2009 Investor agreed to purchase an aggregate of up to 2,000,000 shares (the “2009 Shares”) of the Series A Preferred Stock at a purchase price of $1.00 per share. On July 22, 2009, the Company closed on the issuance of the 2009 Shares for aggregate consideration of $2.0 million. A portion of the proceeds from the issuance was used to repay all principal and interest outstanding under the Credit Facility.

2010 Issuance of Series A Preferred Stock. On July 21, 2009, the Company entered into a second securities purchase agreement (the “Future Purchase Agreement”) with certain private investors (the “Future Investors,” together with the 2009 Investor, the “Preferred Investors”), pursuant to which the Future Investors agreed to purchase, at the Company’s election upon ten days written notice delivered to the Future Investors by the Company, an aggregate of up to 2,000,000 shares of Series A Preferred Stock (the “Future Shares,” together with the 2009 Shares, the “Preferred Shares”) at a purchase price of $1.00 per share. On December 30, 2009, the Company provided notice to the Future Investors that the Company intended to consummate the sale of the Future Shares on January 12, 2010, and on January 12, 2010, the Company closed on the issuance of 2,000,000 Future Shares under the Future Purchase Agreement for aggregate consideration of $2.0 million. Among the Future Investors who purchased an aggregate of 995,000 Future Shares were Hsu Gamma, Frost Gamma and Mr. Spragens, each of whom is the beneficial owner of more than 10% of the Common Stock.

The Company issued the Preferred Shares in reliance upon the exemption from registration under Section 4(2) of the Securities Act. On July 22, 2009 and January 12, 2010, the closing prices of the Common Stock on the OTCBB were $1.10 and $1.25, respectively, resulting in beneficial conversion features of $0.10 and $0.25 per share of Series A Preferred Stock on the respective issue dates. The $200,000 and $500,000 aggregate beneficial conversion features of the Series A Preferred Stock on the issue dates were deemed discounts on the issuance of the Preferred Shares and were recorded as increases to additional paid-in capital in the consolidated financial statements. Because the Series A Preferred Stock was immediately convertible by the holders thereof into Common Stock, the $200,000 and $500,000 aggregate intrinsic value was deemed a dividend paid to the Preferred Investors on the relevant closing date. In the absence of retained earnings, such deemed dividends were recorded as reductions of additional paid-in capital and, for calculating net loss per common share, as increases in losses attributable to common stockholders (see Note 7).

2010 Conversion of Series A Preferred Stock. Effective September 10, 2010 (the “Conversion Date”), the Preferred Investors elected to convert an aggregate of 4.0 million shares of the Series A Preferred Stock pursuant to the terms of the Certificate of Designation. Following conversion of the Series A Preferred Stock, the Company had no issued and outstanding shares of any class of preferred stock. On the Conversion Date, for each converted share of Series A Preferred Stock, the holder thereof became entitled to receive one share of Common Stock, plus all accrued and unpaid dividends (“Unpaid Dividends”) thereon through the Conversion Date, which Unpaid Dividends were paid in shares of Common Stock in accordance with the Certificate of Designation. Approximately $366,000 of Unpaid Dividends had accumulated through the Conversion Date and an aggregate of 365,575 shares of Common Stock were issued as a result of the Unpaid Dividends (the “Dividend Shares”), of which 29,709 Dividend Shares were issued to each of Hsu Gamma and Frost Gamma, and 6,638 Dividend Shares were issued to Mr. Spragens.

To encourage the Preferred Investors to voluntarily convert their respective shares of Series A Preferred Stock, the Company offered to each Preferred Investor who converted his or her shares of Series A Preferred Stock on or prior to the Conversion Date the number of shares of Common Stock (the “Consideration Shares”) equal to the difference between (a) the number of shares of Common Stock issuable pursuant to a holder-initiated conversion of Series A Preferred Stock on March 31, 2012 and (b) the number of shares of Common Stock issuable pursuant to a holder-initiated conversion of Series A Preferred Stock on the Conversion Date, each as calculated in accordance with the Certificate of Designation. The Preferred Investors voluntarily elected to convert all of their respective shares of Series A Preferred Stock, and an aggregate of 697,462 Consideration Shares were issued, of which 76,261 Consideration Shares were issued to each of Hsu Gamma and Frost Gamma, and 17,042 Consideration Shares were issued to Mr. Spragens.

On September 10, 2010, the closing price of the Common Stock on the OTCBB was $1.85, resulting in an intrinsic value of $0.85 per share for the 4,000,000 shares of Common Stock issued upon conversion of the Series A Preferred Stock and the 365,575 shares of Common Stock issued as Dividend Shares. These 4,365,575 shares of Common Stock had an aggregate intrinsic value of $3.7 million on the Conversion Date, which was considered a deemed dividend. The 697,462 Consideration Shares issued on the Conversion Date had an aggregate market value of approximately $1.3 million, which was also considered a deemed dividend on the Conversion Date. In the absence of retained earnings, the $366,000 accumulated dividends and the $5.0 million aggregate deemed dividends were recorded as reductions of additional paid-in capital and, for calculating net loss per common share, as increases in losses attributable to common stockholders (see Note 7).

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 4
-Section 08
-Paragraph d

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 43
-Chapter 1
-Section B
-Paragraph 7, 11A
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 129
-Paragraph 2, 3, 4, 5, 6, 7, 8
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Name Regulation S-X (SX)
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-Article 4

Reference 7: http://www.xbrl.org/2003/role/presentationRef
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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-Name Regulation S-X (SX)
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-Paragraph 29, 30, 31
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
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Reference 10: http://www.xbrl.org/2003/role/presentationRef
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-Name Staff Accounting Bulletin (SAB)
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-Section C

Reference 11: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Subparagraph (SX 210.3-04)
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+ Details

Basic and Diluted Net Loss Per Share

12 Months Ended

Dec. 31, 2011

Basic and Diluted Net Loss Per Share [Abstract]

BASIC AND DILUTED NET LOSS PER SHARE

NOTE 7—BASIC AND DILUTED NET LOSS PER SHARE

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Diluted potential common shares consist of incremental shares issuable upon exercise of stock options and warrants and conversion of preferred stock. In computing diluted net loss per share for the years ended December 31, 2011 and 2010, no adjustment has been made to the weighted average outstanding common shares as the assumed exercise of outstanding options and warrants and conversion of preferred stock would be anti-dilutive.

Potential common shares not included in calculating diluted net loss per share are as follows:


	December 31, 2011		December 31, 2010
Stock options		1,628,167		1,334,667
Stock warrants		805,521		805,521
Series A Preferred Stock		0		0

Total		2,433,688		2,140,188

Under applicable SEC accounting guidance, the difference between (a) the fair value of the consideration transferred to the Preferred Investors upon conversion of the Series A Preferred Stock and (b) the carrying amount of the Series A Preferred Stock on the Company’s balance sheet is required to be added to the Company’s net loss to arrive at loss available to common stockholders in the calculation of loss per share. As discussed in Note 6 above, during the year ended December 31, 2010, the Preferred Investors received an aggregate dividend of $5.4 million, consisting of $0.4 million accumulated dividends and $5.0 million aggregate deemed dividends. This $5.4 million aggregate dividend was recorded as a $4.4 million increase in losses attributable to common stockholders on the Conversion Date, after giving effect to the $0.7 million beneficial conversion feature and $0.3 million cumulative dividends recorded as increases in losses attributable to common stockholders in prior periods.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 8—COMMITMENTS AND CONTINGENCIES

The Company is obligated under various operating lease agreements for office space expiring in 2012. Generally, the lease agreements require the payment of base rent plus escalations for increases in building operating costs and real estate taxes. Rental expense under operating leases amounted to $199,000 and $164,000 for the years ended December 31, 2011 and 2010, respectively. At December 31, 2011, the Company was obligated under non-cancellable operating leases to make future minimum lease payments (excluding sales taxes) as follows:


Year Ending December 31,
2012	$	217,000

		$217,000

The Company is obligated to pay royalties to Creighton University (“Creighton”) on the sales of products licensed from Creighton pursuant to an exclusive license and development agreement (see Note 9). The Company is also obligated under an agreement with Dr. Parviz Amid to pay a 4% royalty to Dr. Amid on the net sales of any product developed with Dr. Amid’s assistance, including the AMID Stapler^®, for a period of ten years from the first commercial sale of such product. No royalties were incurred for, or paid during the years ended December 31, 2011 and 2010.

The Company has placed orders with various suppliers for the purchase of certain tooling, inventory and contract engineering and research services. Each of these orders has a duration or expected completion within the next twelve months. The Company currently has no material commitments with terms beyond twelve months.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
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-Name Accounting Standards Codification
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-Publisher FASB
-Name Accounting Standards Codification
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+ Details

Agreement with Creighton University

12 Months Ended

Dec. 31, 2011

Agreement with Creighton University [Abstract]

AGREEMENT WITH CREIGHTON UNIVERSITY

NOTE 9—AGREEMENT WITH CREIGHTON UNIVERSITY

On May 26, 2006, SafeStitch entered into an exclusive license and development agreement (the “Creighton Agreement”) with Creighton, granting the Company a worldwide exclusive (even as to the university) license, with rights to sublicense, to all the Company’s product candidates and associated know-how based on Creighton technology, including the exclusive right to manufacture, use and sell the product candidates.

Pursuant to the Creighton Agreement, the Company is obligated to pay Creighton, on a quarterly basis, a royalty of 1.5% of the revenue collected worldwide from the sale of any product licensed under the Creighton Agreement, less certain amounts including, without limitation, chargebacks, credits, taxes, duties and discounts or rebates. Also pursuant to the Creighton Agreement, the Company agreed to invest, in the aggregate, at least $2.5 million over 36 months, beginning May 26, 2006, towards development of any licensed product. This $2.5 million investment obligation excluded the first $150,000 of costs related to the prosecution of patents, which the Company invested outside of the Creighton Agreement. The Company is further obligated to pay to Creighton an amount equal to 20% of certain of the Company’s research and development expenditures as reimbursement for the use of Creighton’s facilities. Failure to comply with the payment obligations above will result in all rights in the licensed patents and know-how reverting back to Creighton. As of December 31, 2007, the Company had satisfied the $2.5 million investment obligation described above. For the years ended December 31, 2011 and 2010, the Company paid Creighton $45,000 and $52,000, respectively, in satisfaction of the 20% facility reimbursement obligation.

Pursuant to the Creighton Agreement, SafeStitch is entitled to exercise its own business judgment and sole and absolute discretion over the marketing, sale, distribution, promotion and other commercial exploitation of any licensed products, provided that, if the Company has not commercially exploited or commenced development of a licensed patent and its associated know-how by the seventh anniversary of the later of the date of the Creighton Agreement or the date such technology is disclosed to and accepted by SafeStitch, then the licensed patent and associated know-how shall revert back to the university, with no rights retained by the Company, and the university will have the right to seek a third party with whom to commercialize such patent and associated know-how, unless the Company purchases one or more one-year extensions.

Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

INCOME TAXES

NOTE 10—INCOME TAXES

The Company accounts for income taxes using the asset and liability method, the objective of which is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting and the tax bases of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. A valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

At December 31, 2011, we have approximately $ 11.8 million of federal net operating loss carryforwards to offset future taxable income and $7.0 million of certain operating expenses which have been deferred as start-up costs under Sec. 195 for federal income tax purposes, subject to limitations for alternative minimum tax. Start-up costs will continue to be capitalized until the month in which active business begins, at which time the costs may be amortized over 15 years. In addition, at December 31, 2011 we have approximately $476,000 of research and development tax credit carryforwards. The net operating loss and research and development credit carryforwards expire through 2031.

The difference between income taxes at the statutory federal income tax rate and income taxes reported in the statements of operations are attributable to the following:


	December 31, 2011			December 31, 2010
Income tax benefit at the federal statutory rate		34.00	%		34.00	%
State income taxes, net of effect on federal taxes		3.51	%		3.49	%
Research and development credit		2.84	%		2.71	%
Other		0.56	%		0.25	%
Increase in valuation allowance		(40.91	%)		(40.45	%)

Provision for income tax		0	%		0	%

The deferred tax asset at December 31, 2011 and 2010 consists of the following:


	2011			2010
Net operating loss carryforward	$	4,419,000		$	3,121,000
Deferred start up costs		2,658,000			1,916,000
Research and development credit carryforward		477,000			290,000
Stock-based compensation		520,000			394,000
Other		(13,000	)		(16,000	)

		8,061,000			5,705,000
Less: Valuation allowance		(8,061,000	)		(5,705,000	)

Net deferred tax asset	$	—		$	—

The change in the valuation allowance from December 31, 2010 to December 31, 2011 amounted to approximately $2,356,000. At December 31, 2006, Cellular had available for federal income tax purposes, net operating loss carryforwards of approximately $54.1 million which expire through 2026, and research and development tax credits of approximately $1.2 million that will expire through 2024. The Company had provided a valuation allowance of 100% of the net deferred tax asset related to the operating loss carryforwards and tax credits. Upon consummation of the share exchange with SafeStitch LLC, these net deferred tax assets along with net operating losses for 2007 were forfeited in accordance with Section 382 of the Internal Revenue Code.

The Company recognizes interest and penalties related to uncertain tax positions in general and administrative expense. As of December 31, 2011, the Company has no unrecognized tax position, including interest and penalties.

The tax years 2008-2010 remain open to examination by the major tax jurisdictions in which the Company operates.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 43, 44, 45, 46, 47, 48, 49
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-Name Accounting Standards Codification
-Topic 235
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-Paragraph 1
-Subparagraph (SX 210.4-08.(h))
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+ Details

Certain Relationships and Related Party Transactions

12 Months Ended

Dec. 31, 2011

Certain Relationships and Related Party Transactions [Abstract]

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

NOTE 11—CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In connection with the acquisition of SafeStitch LLC, the Company entered into the Credit Facility with The Frost Group and Jeffrey G. Spragens, the Company’s Chief Executive Officer and President and a director. The Frost Group is a Florida limited liability company whose members include Frost Gamma, a trust controlled by Dr. Phillip Frost, the largest beneficial holder of the issued and outstanding shares of the Company’s common stock, Dr. Jane H. Hsiao, the Company’s Chairman of the Board and Steven D. Rubin, a director. As of December 31, 2011 there was balance outstanding under the Credit Facility of $2,523,000, including $48,000 of accrued interest, and there was no balance outstanding at December 31, 2010 (See Note 5).

The Company entered into a five-year lease for office space in Miami, Florida with a company controlled by Dr. Frost. The non-cancelable lease, which commenced January 1, 2008, provides for a 4.5% annual rent increase over the life of the lease. The Miami office lease was amended in July 2011 to include additional office space in the same building, and current rental payments under the lease are approximately $19,000 per month. The Company recorded $199,000 and $127,000 of rent expense related to the Miami lease for the years ended December 31, 2011 and 2010, respectively.

Dr. Hsiao, Dr. Frost and director Steven Rubin are each significant stockholders and/or directors of Non-Invasive Monitoring Systems, Inc. (“NIMS”), a publicly-traded medical device company, Aero Pharmaceuticals, Inc. (“Aero”), a privately-held pharmaceutical distribution company that dissolved in December 2011, Tiger X Medical, Inc. (“Tiger X”) (formerly known as Cardo Medical, Inc.), a publicly-traded medical device company, and SearchMedia Holdings Limited (“SearchMedia”), a publicly-traded media company operating primarily in China, and Sorrento Therapeutics, Inc. (“Sorrento”), a publicly-traded development stage biopharmaceutical company. Director Richard Pfenniger is also a shareholder of NIMS. The Company’s Chief Financial Officer also serves as the Chief Financial Officer and supervises the accounting staffs of NIMS and, until its dissolution, Aero, under a Board-approved cost sharing arrangement whereby the total salaries of the accounting staffs of the three companies are shared. Aero has not participated in the cost sharing arrangement since June 30, 2011 and was dissolved in December 2011. Since December 2009, the Company’s Chief Legal Officer has served under a similar Board-approved cost sharing arrangement as Corporate Counsel of SearchMedia and as the Chief Legal Officer of each of NIMS and Tiger X, and since June 2011, as Corporate Counsel for Sorrento. The Company has recorded reductions to SG&A costs and expenses for the years ended December 31, 2011 and 2010 of $78,000 and $114,000, respectively, to account for the sharing of accounting costs under this arrangement. The Company has recorded $178,000 and $186,000 of reductions to SG&A costs and expenses for the year ended December 31, 2011 and 2010, respectively, to account for the sharing of legal costs under this arrangement. Aggregate accounts receivable from NIMS, Tiger X, Sorrento and SearchMedia were approximately $66,000 as of December 31, 2011 and are included in other receivable—related party.

- Definition

The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 4
-Section 08
-Paragraph k

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 3A
-Section 04
-Paragraph b

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 57
-Paragraph 1-4
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 235
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+ Details

Employee Benefit Plans

12 Months Ended

Dec. 31, 2011

Employee Benefit Plans [Abstract]

EMPLOYEE BENEFIT PLANS

NOTE 12—EMPLOYEE BENEFIT PLANS

Effective May 1, 2008, the SafeStitch 401(k) Plan (the “401k Plan”) permits employees to contribute up to 100% of qualified annual compensation up to annual statutory limitations. Employee contributions may be made on a pre-tax basis to a regular 401(k) account, or on an after-tax basis to a “Roth” 401(k) account. The Company will contribute to the 401k Plan a “safe harbor” match of 100% of each participant’s contributions to the 401k Plan up to a maximum of 4% of the participant’s qualified annual earnings. The Company’s matching contributions to the plan were approximately $39,000 and $39,000, respectively, for the years ended December 31, 2011 and 2010.

- Definition

The entire disclosure for pension and other postretirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph a
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Subparagraph b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph h
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 106
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 87
-Paragraph 264
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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-Name Emerging Issues Task Force (EITF)
-Number 03-2
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Principles Board Opinion (APB)
-Number 30
-Paragraph 26
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Reference 11: http://www.xbrl.org/2003/role/presentationRef
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Reference 12: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5, 6, 7, 8
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-Publisher FASB
-Name Implementation Guide (Q and A)
-Number FAS88
-Paragraph 63
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Reference 14: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Concentration of Risk

12 Months Ended

Dec. 31, 2011

Concentration of Risk [Abstract]

CONCENTRATION OF RISK

NOTE 13—CONCENTRATION OF RISK

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash. The Company maintains its cash at banks and financial institutions it considers to be of high credit quality; however the Company’s cash deposits may at times exceed the FDIC insured limit. The Company’s deposits at banks in excess of the FDIC insured limit are maintained in sweep accounts that are collateralized by overnight repurchase agreements. The Company has not experienced losses on these accounts, and management believes that the Company is not exposed to significant risks on such accounts.

- Definition

The entire disclosure for any concentrations existing at the date of the financial statements that make an entity vulnerable to a reasonably possible, near-term, severe impact. This disclosure informs financial statement users about the general nature of the risk associated with the concentration, and may indicate the percentage of concentration risk as of the balance sheet date.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15A
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 94-6
-Paragraph 21, 22, 24
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Subsequent Events

12 Months Ended

Dec. 31, 2011

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 14—SUBSEQUENT EVENTS

In February 2012, the Company granted to directors, officers, existing employees and consultants an aggregate of 813,500 options to purchase the Company’s common stock under the 2007 Plan. The options were granted at exercise prices of $0.65 and $0.85 per share.

On February 17, 2012, the Company entered into a stock purchase agreement (the “2012 Stock Purchase Agreement”) with 35 investors (the “Investors”) pursuant to which the Investors agreed to purchase an aggregate of 20,794,000 shares of Common Stock (the “Shares”), at a price of $0.40 per share, with net proceeds to the Company of $8.3 million. A portion of the proceeds was used to pay off $3.1 million outstanding under the Credit Facility, and the balance of the proceeds will be used for continued research, development and commercialization of the Company’s products and product candidates. Among the Investors purchasing Shares were Frost Gamma, Dr. Jane Hsiao, the Company’s Chairman of the Board, Jeffrey Spragens, the Company’s President and Chief Executive Officer and Richard Pfenniger, a member of the Company’s Board of Directors. Frost Gamma and Dr. Hsiao each purchased 4,500,000 shares, Mr. Spragens purchased 250,000 shares, and Mr. Pfenniger purchased 125,000 shares.