Note 5 - Related Party Transactions

9 Months Ended

Dec. 31, 2012

Related Party Transactions Disclosure [Text Block]

Note 5.    Related Party Transactions

As part of the assets and liabilities acquired in August 2010 as a result of the AVID acquisition, the Company assumed a capital lease obligation for the AVID facility located in Toano, Virginia. The facility, which includes an 185,000 square foot manufacturing and warehouse building and approximately 12 acres of land, is owned by Micpar Realty, LLC (“Micpar”). AVID’s founder, former CEO and principal shareholder, is a part owner of Micpar and subsequent to the acquisition of AVID, he was appointed to the Company’s board of directors. As of August 2012, he no longer serves on the Company’s board of directors.

The gross amount and related accumulated amortization of the AVID facility is as follows:

	December 31,			March 31,
	2012			2012
Plant and fixed equipment	$	11,409		$	11,409
Less: Accumulated amortization		(1,433	)		(972	)
	$	9,976		$	10,437

During the three months ended December 31, 2012 and 2011 and the nine months ended December 31, 2012 and 2011, the Company recorded $154 (of which $35 is included in our cost of sales and $119 is included in our selling, general and administrative expenses) and $461 (of which $106 is included in our cost of sales and $355 is included in our selling, general and administrative expenses) of amortization expense associated with the capital lease, respectively.

As of December 31, 2012, the capital lease requires monthly payments of $124 with increases of 2% per annum. The lease contains provisions for an option to buy in 2013 and 2015 and expires in March 2029. The effective rate on the capital lease obligation is 9.9%.  The Company recorded interest expense associated with the lease obligation of $338 and $341 for the three months ended December 31, 2012 and 2011, respectively, and $1,016 and $1,024 for the nine months ended December 31, 2012 and 2011, respectively.

The following is a schedule by years of the future minimum lease payments under the capital lease as of December 31, 2012:

Fiscal Year	Capital Lease Payments
Balance of Fiscal 2013	$	372
2014		1,518
2015		1,549
2016		1,580
2017		1,611
Thereafter		22,043
Total minimum lease payments		28,673
Less:  Amounts representing interest		14,986
Present value of minimum lease payments		13,687
Less: Current portion of capital lease obligation		165
Long-term portion of capital lease obligation	$	13,522

A current member of the Company’s board of directors is currently a minority shareholder of Custom Healthcare Systems (CHS), an assembler and packager of Class 1 medical products. CHS is a supplier to our AVID facility located in Toano, Virginia for small kits and trays. They also purchase sterile instruments from our facility located in Arden, North Carolina. CHS sold approximately $455 and $1,344 in small kits and trays to the Company during the three and nine months ended December 31, 2012, respectively and purchased approximately $215 and $678 of sterile instruments from the Company during the three and nine months ended December 31, 2012, respectively.  As of December 31, 2012, $188 was due to the Company from CHS and $20 was due to CHS from the Company.