SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Goodwill.  Goodwill resulting from business acquisitions is carried at cost.  The carrying amount of goodwill is tested for impairment at least annually at the reporting unit level, as defined, and will only be reduced if it is found to be impaired or is associated with assets sold or otherwise disposed of.  There was no goodwill impairment charges recorded during the six months ended June 30, 2014 or 2013.

b. Inventories.  Inventories are valued at the lower of cost, on a first-in, first-out method, or market.  Work in process and finished goods include materials, labor and allocated overhead.

Inventories consist of the following at June 30, 2014 and December 31, 2013, (in thousands):

	June 30,		December 31,
	2014		2013
Raw materials	$	173		286
Work in process		390		319
Finished goods		30		42
Inventories	$	593		647

c. Other Intangibles.  Intangibles assets are amortized over their estimated useful lives using the straight-line method.  The following is a summary of intangible assets subject to amortization as of June 30, 2014 and December 31, 2013, including the retroactive adjustments for final valuation of such intangible assets (in thousands):

	June 30,			December 31,
	2014			2013
Customer list	$	2,927			2,927
Less: accumulated amortization		(1,730	)		(1,514	)
Other intangible assets, net	$	1,197			1,413

Amortization expense was $0.2 million for the six months ended June 30, 2014 and 2013, respectively.

d. Fair Value Measurements.  To prioritize the inputs the Company uses in measuring fair value, the Company applies a three-tier fair value hierarchy. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, reflects management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration was given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.  Determining which hierarchical level an asset or liability falls within requires significant judgment.  The Company evaluates its hierarchy disclosures each quarter.  The following table summarizes the financial instruments measured at fair value in the Consolidated Balance Sheet as of June 30, 2014 and December 31, 2013:

June 30, 2014	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Liabilities
Put obligation on common stock	$	-	$	5,694	$	-	$	5,694

December 31, 2013	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Liabilities
Put obligation on common stock	$	-	$	5,694	$	-	$	5,694