10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC. 20549

FORM 10-Q/A

Amendment No. 1

(Mark One)

    x     Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Quarterly Period ended June 30, 2012

or

    ¨     Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Transition Period from         to         

Commission File Number 0-19437

SAFESTITCH MEDICAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	11-2962080
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)
4400 Biscayne Blvd., Suite A-100, Miami, Florida	33137
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (305) 575-4600

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

48,797,755 shares of the Company’s common stock, par value $0.001 per share, were outstanding as of August 10, 2012.

Explanatory Note

This Amendment No. 1 on Form 10-Q/A amends the Quarterly Report on Form 10-Q of SafeStitch Medical, Inc. for the quarter ended June 30, 2012 filed on August 14, 2012 (the “Form 10-Q”) for the sole purpose of furnishing the interactive data files as Exhibit 101 in accordance with Rule 405(a)(2) of Regulation S-T.

No other changes have been made to the Form 10-Q. This Form 10-Q/A speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the Form 10-Q.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS

Exhibit No.	Description
31.1*	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act
31.2*	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act
32.1*	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS **	XBRL Instance Document
101.SCH **	XBRL Taxonomy Extension Schema Document
101.CAL **	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF **	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB **	XBRL Taxonomy Extension Label Linkbase Document
101.PRE **	XBRL Taxonomy Extension Presentation Linkbase Document

* Previously filed or furnished with the Quarterly Report on Form 10-Q of SafeStitch Medical, Inc. for the quarter ended June 30, 2012 filed on August 14, 2012.

** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise not subject to liability under those sections.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SAFESTITCH MEDICAL, INC.
Date: August 30, 2012	By:	/s/ James J. Martin
		James J. Martin
		Chief Financial Officer
		(Duly Authorized Officer and
		Principal Accounting Officer)

EXHIBIT INDEX

Exhibit No.	Description
31.1*	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act
31.2*	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act
32.1*	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS **	XBRL Instance Document
101.SCH **	XBRL Taxonomy Extension Schema Document
101.CAL **	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF **	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB **	XBRL Taxonomy Extension Label Linkbase Document
101.PRE **	XBRL Taxonomy Extension Presentation Linkbase Document

* Previously filed or furnished with the Quarterly Report on Form 10-Q of SafeStitch Medical, Inc. for the quarter ended June 30, 2012 filed on August 14, 2012.

** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise not subject to liability under those sections.

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Basic and Diluted Net Loss Per Share (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Summary of Potential Common Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share	3,150,021	2,435,188
Basic and Diluted Net Loss Per Share (Textual) [Abstract]
Weighted average outstanding common shares	0	0
Stock Options [Member]
Summary of Potential Common Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share	2,344,500	1,629,667
Stock Warrants [Member]
Summary of Potential Common Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share	805,521	805,521

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Summary of Significant Accounting Policies (Details Textual) (USD $)	3 Months Ended		6 Months Ended		81 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012
Summary of Significant Accounting Policies (Textual) [Abstract]
Inventory Balance	$ 1,646,000		$ 1,646,000		$ 1,646,000
Components	972,000		972,000		972,000
Finished units	671,000		671,000		671,000
Standard mesh	3,000		3,000		3,000
Selling, General and Administrative costs and expenses	1,068,000	467,000	1,981,000	1,121,000	10,977,000
Advertising and Promotional costs and expense	$ 45,000	$ 0	$ 83,000	$ 9,000

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Certain Relationships and Related Party Transactions (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Certain Relationships And Related Party Transactions (Textual) [Abstract]
Credit facility	$ 4,000,000		$ 4,000,000
Lease period for office space			5 years
Percentage of annual rent increase of lease			4.50%
Current rental payments under the lease			19,000
Reduction in selling general and administrative costs and expenses	52,000	78,000	103,000	154,000
Aggregate account receivable from NIMS	35,000		35,000		66,000
Mr. Spragens and The Frost Group [Member]
Certain Relationships And Related Party Transactions (Textual) [Abstract]
Credit facility	4,000,000		4,000,000
Miami [Member]
Certain Relationships And Related Party Transactions (Textual) [Abstract]
Current rental payments under the lease	$ 69,000	$ 47,000	$ 126,000	$ 94,000

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2012

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation. The condensed 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 and are evaluated for impairment when conditions exist that suggests impairment may be necessary. The $1.6 million inventory balance at June 30, 2012 consists of $972,000 in components, $671,000 in finished units of the AMID HFD and $3,000 in standard mesh. Scrap materials and quality testing costs are included in Cost of Goods Sold (“COGS”), as incurred. Provisions for potentially obsolete or slow-moving inventory are made based on management’s analysis of inventory levels, obsolescence and future sales forecasts.

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 costs and expenses for all periods presented, and totaled $45,000 and $83,000, respectively, for the three and six months ended June 30, 2012. Advertising and promotional costs and expenses totaled $0 and $9,000, respectively, for the three and six months ended June 30, 2011.

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 to employees and directors, based on their grant date fair values. Compensation for share-based payments to non-employees is based on the fair value at the measurement date, which is generally the performance completion date. The fair value is initially measured at the grant date and subsequently measured at each reporting period until the final measurement date. 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 an accrual basis when the credit is considered realized, which is generally when approved by the government agency. Such credit is reported as other income in the accompanying financial statements.

Fair value of financial instruments. The carrying amounts of cash and cash equivalents, accounts payable, accrued expenses and notes payable approximate fair value based on their short-term maturity. Related party receivables and stockholder loans are carried at cost.

Long-lived assets. The Company reviews the carrying values of its long-lived assets 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 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, and, as a result, no statement of comprehensive income (loss) has been included in the condensed consolidated financial statements.

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Stock-Based Compensation (Details 1) (USD $)	3 Months Ended		6 Months Ended		11 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 30, 2011
Summary of Company's Stock Option activity
Outstanding, Shares, Beginning Balance			1,628,167
Outstanding, Weighted Average Exercise Price, Beginning Balance			$ 1.35
Outstanding, Weighted Average Remaining Contractual Term, Beginning Balance			6 years 3 months 4 days
Granted, Shares			813,500	562,500
Granted, Weighted Average Exercise Price			$ 0.66		$ 1.12
Granted, Weighted Average Remaining Contractual Term			9 years 7 months 21 days
Exercised, Shares
Exercised, Weighted Average Exercise Price
Canceled or expired, Shares			(97,167)
Canceled or expired, Weighted Average Exercise Price			$ 2.43
Outstanding, Shares, Ending Balance	2,344,500		2,344,500
Outstanding, Weighted Average Exercise Price, Ending Balance	$ 1.06		$ 1.06
Outstanding, Weighted Average Remaining Contractual Term, Ending Balance	7 years 1 month 10 days		7 years 1 month 10 days
Outstanding, Intrinsic Value, Ending Balance	$ 0		$ 0
Exercisable, Shares	1,128,125		1,128,125
Exercisable, Weighted Average Exercise Price	$ 1.30		$ 1.30
Exercisable, Weighted Average Remaining Contractual Term	5 years 4 months 21 days		5 years 4 months 21 days
Exercisable, Intrinsic Value	0		0
Vested and expected to vest, Shares	2,292,060		2,292,060
Vested and expected to vest, Weighted Average Exercise Price	$ 1.07		$ 1.07
Vested and expected to vest, Weighted Average Remaining Contractual Term	7 years 29 days		7 years 29 days
Vested and expected to vest, Aggregate Intrinsic Value	$ 0		$ 0

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Stock-Based Compensation (Details)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Summary of Share-Based Compensation of Fair Value Assumptions
Expected Volatility, Minimum	85.41%	76.91%
Expected Volatility, Maximum	111.36%	102.63%
Expected Dividend yield	0.00%	0.00%
Risk Free Interest Rate, Minimum	1.02%	2.25%
Risk Free Interest Rate, Maximum	1.98%	3.25%
Minimum Expected Term	5 years 6 months	5 years 6 months
Maximum Expected Term	10 years	10 years
Minimum Forfeiture Rate	0.00%	0.00%
Maximum Forfeiture Rate	2.00%	5.00%

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Stock-Based Compensation (Details Textual) (USD $)	3 Months Ended		6 Months Ended		11 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 30, 2011	Jun. 19, 2012	Jun. 30, 2012 Consultants [Member]	Jun. 30, 2011 Consultants [Member]	Dec. 31, 2012 Minimum [Member]	Dec. 31, 2012 Maximum [Member]
Stock-Based Compensation (Textual) [Abstract]
Stock option granted			813,500	562,500			218,000	68,000
Stock option exercise price			$ 0.66		$ 1.12				$ 0.65	$ 0.85
Stock-Based Compensation (Additional Textual) [Abstract]
Common stock shares available for issuance						5,000,000
Period for conditional grant of award			12 months
Maximum number of Shares for which share awards can be granted			1,000,000
Stock option exceeding period			10 years
Estimated aggregate fair value of stock option			$ 441,000		$ 502,000
Weight average fair value of the options granted			$ 0.54	$ 0.89
Share-based Compensation Expense	113,000	98,000	224,000	142,000
Stock based compensation forfeiture experience recorded				113,000
Number of options vested	0		0
Unrecognized compensation cost related to non vested employee and director share based compensation arrangement	446,000		446,000
Weighted average period for which cost is expected to be recognized			1 year 7 months 2 days
Stock option exercised
Tax benefits attributed to the stock-based compensation expense

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Debt (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Line of Credit Facility (Textual) [Abstract]
Credit facility available Borrowing	$ 4,000,000		$ 4,000,000
Credit facility accrue interest rate			10.00%
Credit facility initial term			28 months
Warrants granted to purchase aggregate common stock			805,521
Fair value of warrants			1,985,000
Expected volatility			82.00%
Dividend yield			0.00%
Risk free interest rate			4.88%
Expected Life			10 years
Amortization expenses related to deferred financing cost	3,000	6,000	5,000	31,000
Outstanding loans	0		0
The Frost Group [Member]
Line of Credit Facility (Textual) [Abstract]
Credit facility available Borrowing	3,900,000		3,900,000
Mr. Spragens [Member]
Line of Credit Facility (Textual) [Abstract]
Credit facility available Borrowing	$ 100,000		$ 100,000
Credit Facility [Member]
Line of Credit Facility (Textual) [Abstract]
Maturity date			Jun. 30, 2013

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Basis of Presentation and Liquidity

6 Months Ended

Jun. 30, 2012

Basis of Presentation and Liquidity [Abstract]

BASIS OF PRESENTATION AND LIQUIDITY

NOTE 1 – BASIS OF PRESENTATION AND LIQUIDITY

The following (a) condensed consolidated balance sheet as of December 31, 2011, which has been derived from audited financial statements, and (b) the unaudited condensed consolidated interim financial statements of SafeStitch Medical, Inc. (“SafeStitch” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2012 are not necessarily indicative of results that may be expected for the year ending December 31, 2012. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2011 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 30, 2012.

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 June 30, 2012, the Company has accumulated a deficit of $26.9 million and has not generated 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, 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 June 30, 2013 when the Credit Facility matures. However, if the Company does not generate sufficient revenue from sales of the AMID™ Hernia Fixation Device (the “AMID HFD”) to fund all planned operations, including the commercialization of certain of the Company’s products and product candidates, including the Intraluminal Gastroplasty Device for Obesity and GERD (“Gastroplasty Device”), and the anticipated expansion in 2012 of clinical trials for certain of the Company’s product candidates, 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. Our management believes that based on our current cash position, together with the availability under our existing line of credit, which matures on June 30, 2013, and by monitoring our discretionary expenditures, we will be able to fund our current cash flow requirements through June 30, 2013. However, unless the Credit Facility Maturity Date is extended, additional funding will be required to repay the Credit Facility and to continue operations. This uncertainty raises substantial doubt about the Company’s ability to continue as a going concern.

The accompanying financial statements do not include any adjustments that might be necessary as a result of the outcome of such uncertainty. In addition to securing additional funds, 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.

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Capital Transactions (Details Textual) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended		1 Months Ended		1 Months Ended
	Dec. 31, 2010	Dec. 31, 2008	Feb. 29, 2012 2012 PIPE investors [Member]	Feb. 17, 2012 2012 PIPE investors [Member] Investor	Feb. 29, 2012 2012 PIPE investors [Member] Chairman of Board [Member]	Feb. 29, 2012 2012 PIPE investors [Member] Chairman of Board 1 [Member]	Feb. 29, 2012 2012 PIPE investors [Member] Board of Directors [Member]	Feb. 29, 2012 2012 PIPE investors [Member] President and Chief Executive Officer [Member]
Capital Transactions (Textual) [Abstract]
Number of Investors				35
Purchase of Common stock			20,794,000		4,500,000	4,500,000	125,000	250,000
Stock issued during period price per shares			$ 0.40
Aggregate Consideration	$ 4,974	$ 3,988	$ 8,300

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
CURRENT ASSETS
Cash and cash equivalents	$ 1,301	$ 298
Accounts Receivable - trade	8
Other receivable - related-party	35	66
Prepaid expenses	158	143
Inventories	1,646
Total Current Assets	3,148	507
FIXED ASSETS
Property and equipment, net	392	470
OTHER ASSETS
Security deposits	2	2
Deferred financing costs, net	9	14
Total Other Assets	11	16
TOTAL ASSETS	3,551	993
CURRENT LIABILITIES
Accounts payable and accrued liabilities	1,146	469
Total Current Liabilities	1,146	469
Stockholder loans, including accrued interest (Note 5)		2,523
Commitments and contingencies (Note 8)
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value per share, 225,000,000 shares authorized, 48,797,755 and 28,003755 shares issued and outstanding	49	28
Additional paid-in capital	29,283	20,762
Deficit accumulated during the development stage	(26,927)	(22,789)
Total Stockholders' Equity (Deficit)	2,405	(1,999)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$ 3,551	$ 993

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Condensed Consolidated Statements of Stockholder's Equity (Deficit) (Parenthetical) (USD $)	1 Months Ended					12 Months Ended	1 Months Ended									1 Months Ended					1 Months Ended		12 Months Ended
	Jun. 30, 2010	Dec. 30, 2008	May 31, 2008	Jan. 31, 2010 Series A Preferred Stock	Jul. 31, 2009 Series A Preferred Stock	Dec. 31, 2010 Series A Preferred Conversion	Sep. 30, 2010 Preferred Stock	Jan. 31, 2010 Preferred Stock Series A Preferred Stock	Jul. 31, 2009 Preferred Stock Series A Preferred Stock	Sep. 30, 2010 Common Stock	Jun. 30, 2010 Common Stock	Dec. 30, 2008 Common Stock	May 31, 2008 Common Stock	Jun. 30, 2012 Common Stock	Jan. 08, 2008 Common Stock	Sep. 30, 2010 Additional Paid-in Capital	Jun. 30, 2010 Additional Paid-in Capital	Dec. 30, 2008 Additional Paid-in Capital	May 31, 2008 Additional Paid-in Capital	Jun. 30, 2012 Additional Paid-in Capital	Jan. 31, 2010 Additional Paid-in Capital Series A Preferred Stock	Jul. 31, 2009 Additional Paid-in Capital Series A Preferred Stock	Dec. 31, 2010 Additional Paid-in Capital Series A Preferred Conversion
Conversion of shares of series A Preferred Stock							4,000,000			4,000,000						4,000,000
Conversion of accumulated dividends							4,366,000			4,366,000						4,366,000
Issuance of common shares in private offering	$ 1.00		$ 2.15								$ 1.00		$ 2.15				$ 1.00		$ 2.15
Repayment of stockholder related to Issuance of common shares		$ 1.22										$ 1.22						$ 1.22
Issuance of Series A Preferred Stock				$ 1.00	$ 1.00			$ 1.00	$ 1.00												$ 1.00	$ 1.00
Intrinsic value of aggregate shares of Common Stock issued on conversion of Series A Preferred Stock						5,063,000																	5,063,000
Common stock, par value														$ 0.40	$ 0.01					$ 0.40
Common stock, shares issued														20,794,000,000						20,794,000,000

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Agreement With Creighton University (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Agreement with Creighton University (Textual) [Abstract]
Percentage of royalty of product revenue			1.50%
Minimum investment under royalty agreement	$ 2,500,000		$ 2,500,000
Period for minimum investment under royalty agreement			36 months
Patent related under royalty agreement			150,000
Reimbursement percentage of research and development expenses			20.00%
Research and development expense under royalty agreement	$ 11,000	$ 11,000	$ 23,000	$ 21,000

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation [Abstract]

Summary of Share Based Compensation of Fair Value Assumptions

	Six months ended June 30, 2012	Six months ended June 30, 2011
Expected volatility	85.41% -111.36%	76.91% -102.63%
Expected dividend yield	0.00%	0.00%
Risk-free interest rate	1.02% –1.98%	2.25% –3.25%
Expected life	5.5 – 10.0 years	5.5 –10.0 years
Forfeiture rate	0% - 2%	0% - 5%

Summary of Company's Stock Option activity

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2011		1,628,167		$	1.35		6.26
Granted		813,500		$	0.66		9.64
Exercised		—			—
Canceled or expired		(97,167	)	$	2.43
Outstanding at June 30, 2012		2,344,500		$	1.06		7.11	$	0
Exercisable at June 30, 2012		1,128,125		$	1.30		5.39	$	0
Vested and expected to vest at June 30, 2012		2,292,060		$	1.07		7.08	$	0

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Income Taxes (Details Textual) (USD $)	6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Income Taxes (Textual) [Abstract]
Uncertain tax provisions adjustment	$ 0
Provisions for accrued interest and penalties related to uncertain tax positions	$ 0	$ 0

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Basis of Presentation and Liquidity (Details Textual) (USD $)	6 Months Ended						1 Months Ended
	Jun. 30, 2012	Dec. 31, 2011	Sep. 15, 2005	Jan. 08, 2008 Maximum [Member]	Jan. 08, 2008 Minimum [Member]	Jan. 08, 2008 Common Stock [Member]	Sep. 30, 2007 Common Stock [Member] Cellular [Member]	Jan. 08, 2008 Preferred Stock [Member]
Basis of Presentation and Liquidity (Textual) [Abstract]
Common stock, shares issued							11,256,369
Capital stock , share authorized				250,000,000	35,000,000
Common stock, shares authorized	225,000,000	225,000,000				225,000,000
Common Stock at Par value	$ 0.001	$ 0.001
Preferred Stock, Par value								$ 0.01
Preferred Stock, Share issued								25,000,000
Accumulated deficit			$ 26,900,000
Credit facility available Borrowing	$ 4,000,000
Maturity Date for line of Credit	Jun. 30, 2013

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended		81 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012
OPERATING ACTIVITIES
Net loss	$ (4,138)	$ (2,657)	$ (26,927)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of deferred finance cost	5	31	1,975
Stock-based compensation expense	224	142	1,529
Stock-based compensation expense related to Share Exchange			77
Depreciation and amortization	84	57	426
Loss from disposal of assets		20	20
Inventory Adjustments			139
Gain on sale of TruePosition investment			(903)
Changes in operating assets and liabilities
Inventories	(1,646)		(1,785)
Other current assets	8	(30)	(181)
Other assets			(2)
Accounts payable and accrued liabilities	677	126	862
Accrued Interest	(48)
NET CASH USED IN OPERATING ACTIVITIES	(4,834)	(2,311)	(24,770)
INVESTING ACTIVITIES
Purchase of equipment	(6)	(85)	(838)
Proceeds from sale of True Position investment			903
Payment received under Rule 16b			4
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES	(6)	(85)	69
FINANCING ACTIVITIES
Net cash provided in connection with the acquisition of SafeStitch LLC			3,192
Issuance of Common Stock, net of offering costs	8,318		17,280
Issuance of Preferred Stock, net of offering costs			3,980
Capital contributions			1,431
Proceeds from notes payable			141
Repayment of notes payable		(42)	(141)
Proceeds from stockholders loans	500		5,835
Repayment of stockholders loans	(2,975)		(5,751)
Exercise of options			35
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	5,843	(42)	26,002
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	1,003	(2,438)	1,301
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	298	3,032
CASH AND CASH EQUIVALENTS AT END OF PERIOD	1,301	594	1,301
Supplemental disclosures:
Cash paid for interest	91		155
Non cash activities:
Non-cash dividend upon issuance & conversion of Preferred Stock			5,001
Stock dividends			366
Stockholder loans contributed to capital			84
Warrants issued in connection with credit facility			$ 1,985

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	225,000,000	225,000,000
Common stock, shares issued	48,797,755	48,797,755
Common Stock, shares outstanding	28,003,755	28,003,755

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Income Taxes

6 Months Ended

Jun. 30, 2012

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. All of the Company’s deferred tax assets have been fully reserved by a valuation allowance due to management’s uncertainty regarding the future profitability of the Company.

The Company has recognized no adjustment for uncertain tax provisions. SafeStitch recognizes interest and penalties related to uncertain tax positions in selling, general and administrative costs and expenses; however no such provisions for accrued interest and penalties related to uncertain tax positions have been recorded as of June 30, 2012 or December 31, 2011.

The tax years 2008-2011 remain open to examination by the major tax jurisdictions in which the Company operates.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 10, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	SAFESTITCH MEDICAL, INC.
Entity Central Index Key	0000876378
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		48,797,755

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Certain Relationships and Related Party Transactions

6 Months Ended

Jun. 30, 2012

Certain Relationships and Related Party Transactions [Abstract]

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

NOTE 11 – CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

As more fully described in Note 5, the Company entered into a $4.0 million Credit Facility with both Jeffrey G. Spragens, the Company’s President, Chief Executive Officer and director, and The Frost Group.

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 August 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 rent expense related to the Miami lease totaling approximately $69,000 and $126,000, respectively, for the three and six months ended June 30, 2012, and $47,000 and $94,000, respectively, for the three and six months ended June 30, 2011.

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 selling, general and administrative costs and expenses to account for the sharing of costs under these arrangements of $52,000 and $103,000, respectively, for the three and six months ended June 30, 2012, and $78,000 and $154,000, respectively, for the three and six months ended June 30, 2011. Aggregate accounts receivable from NIMS, Aero, Tiger X and SearchMedia were approximately $35,000 and $66,000 as of June 30, 2012 and December 31, 2011, respectively.

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended		81 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012
Revenues	$ 9		$ 9		$ 9
Cost of sales	171		171		171
Gross margin	(162)		(162)		(162)
Operating costs and expenses
Research and development	769	849	1,947	1,505	14,884
Selling, general and administrative	1,068	467	1,981	1,121	10,977
Total operating costs and expenses	1,837	1,316	3,928	2,626	25,861
Operating loss	(1,999)	(1,316)	(4,090)	(2,626)	(26,023)
Other income and expense
Other income					1,147
Interest income, net					79
Amortization of deferred financing cost	(3)	(6)	(5)	(31)	(1,975)
Interest exp			(43)		(155)
Total other income and expense	(3)	(6)	(48)	(31)	(904)
Loss before income tax	(2,002)	(1,322)	(4,138)	(2,657)	(26,927)
Provision for income tax
Net loss	(2,002)	(1,322)	(4,138)	(2,657)	(26,927)
Loss attributable to common stockholders and loss per common share:
Net loss	(2,002)	(1,322)	(4,138)	(2,657)	(26,927)
Net loss attributable to common stockholders	(2,002)	(1,322)	(4,138)	(2,657)	(32,293)
Weighted average shares outstanding, basic and diluted	48,798	28,004	43,314	28,004
Net loss per basic and diluted share	$ (0.04)	$ (0.05)	$ (0.10)	$ (0.09)
Series A Preferred Conversion
Loss attributable to common stockholders and loss per common share:
Deemed dividend					(4,301)
Series A Preferred Stock
Loss attributable to common stockholders and loss per common share:
Deemed dividend					(700)
Dividends - Series A Preferred Stock					$ (366)

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Debt

6 Months Ended

Jun. 30, 2012

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 $4.0 million in total available borrowings, consisting of $3.9 million from The Frost Group and $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 Common Stock to The Frost Group and Mr. Spragens. The fair value of the warrants was determined to be $1,985,000 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 related to these deferred financing costs of $3,000 and $5,000, respectively, for the three and six months ended June 30, 2012 and $6,000 and $31,000, respectively, for the three and six months ended June 30, 2011. The Company has no outstanding loans as of June 30, 2012.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

NOTE 4 – STOCK-BASED COMPENSATION

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 19, 2012 to increase the number of shares of Common Stock available for issuance to 5,000,000. 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 5,000,000 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 Company’s shares at the date of grant and, within any 12 month period, no person may receive stock options or stock appreciation rights for more than one million shares. Additionally, no stock options or stock appreciation rights granted under the 2007 Plan may have a term exceeding ten years.

The Company granted 813,500 and 562,500 stock options under the 2007 Plan during the six months ended June 30, 2012 and 2011, respectively, including 218,000 and 68,000 stock options that were issued to consultants. The options granted during 2012 were issued at an exercise price ranging from $0.65 to $0.85 per share and had an estimated aggregate grant date fair value of $441,000. 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 weighted average grant date fair value of the options granted during the six months ended June 30, 2012 and 2011 was $0.54 per share and $0.89 per share, respectively.

Total stock-based compensation recorded for the three and six months ended June 30, 2012 was $113,000 and $224,000, respectively. Total stock-based compensation recorded for the three and six months ended June 30, 2011 was $98,000 and $142,000, respectively. The stock-based compensation recorded for the six months ended June 30, 2011 included a credit of $113,000 for a change in forfeiture experience. All stock-based compensation is included in selling, general and administrative costs and expenses. The fair values of options granted are estimated on the date of their grant using the Black-Scholes option pricing model based on the assumptions included in the table below. 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 Common 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 granted to employees and non-employee directors 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. The expected life of all other stock option awards is the contractual term of the option. Forfeiture rates are based on management’s estimates. The fair value of each option granted during the six months ended June 30, 2012 and 2011 was estimated using the following assumptions.

	Six months ended June 30, 2012	Six months ended June 30, 2011
Expected volatility	85.41% -111.36%	76.91% -102.63%
Expected dividend yield	0.00%	0.00%
Risk-free interest rate	1.02% –1.98%	2.25% –3.25%
Expected life	5.5 – 10.0 years	5.5 –10.0 years
Forfeiture rate	0% - 2%	0% - 5%

The following summarizes the Company’s stock option activity for the six months ended June 30, 2012:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2011		1,628,167		$	1.35		6.26
Granted		813,500		$	0.66		9.64
Exercised		—			—
Canceled or expired		(97,167	)	$	2.43
Outstanding at June 30, 2012		2,344,500		$	1.06		7.11	$	0
Exercisable at June 30, 2012		1,128,125		$	1.30		5.39	$	0
Vested and expected to vest at June 30, 2012		2,292,060		$	1.07		7.08	$	0

None of the 813,500 options granted during the first six months of the Company’s 2012 fiscal year were vested as of June 30, 2012. At June 30, 2012, there was approximately $446,000 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 1.59 years.

No options were exercised during the three and six months ended June 30, 2012 and 2011.

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

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Basic and Diluted Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2012

Basic and Diluted Net Loss Per Share [Abstract]

Summary of Potential Common Shares

	June 30, 2012		June 30, 2011
Stock options		2,344,500		1,629,667
Stock warrants		805,521		805,521
Total		3,150,021		2,435,188

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2012

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 contributes 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 recorded 401(k) Plan matching expense of approximately $4,000 and $15,000, respectively, for the three and six months ended June 30, 2012 and $9,000 and $19,000, respectively, for the three and six months ended June 30, 2011.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 8 – COMMITMENTS AND CONTINGENCIES

The Company is obligated under various operating lease agreements for office space. 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 $73,000 and $133,000 for the three and six months ended June 30, 2012, respectively, and $52,000 and $105,000 for the three and six months ended June 30, 2011, respectively.

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 sales of any product developed with Dr. Amid’s assistance, including the AMID HFD, for a period of ten years from the first commercial sale of such product. Royalties to Dr. Parviz Amid in the amount of $400 have been incurred during the three and six months ended June 30, 2012. No royalties have been incurred or paid for the three and six months ended June 30, 2011.

The Company has placed orders with various suppliers for the purchase of certain tooling, 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.

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Capital Transactions

6 Months Ended

Jun. 30, 2012

Capital Transactions [Abstract]

CAPITAL TRANSACTIONS

NOTE 6 – CAPITAL TRANSACTIONS

2012 Private Placement of Common Stock. On February 17, 2012, the Company entered into a stock purchase agreement (the “2012 Stock Purchase Agreement”) with 35 investors (the “2012 PIPE Investors”) pursuant to which the 2012 PIPE Investors agreed to purchase an aggregate of 20,794,000 shares of Common Stock (the “2012 PIPE Shares”) at a price of $0.40 per share for aggregate consideration of $8.3 million. 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. The Company issued the 2012 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.

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Basic and Diluted Net Loss Per Share

6 Months Ended

Jun. 30, 2012

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 for the period reported. Diluted net loss per common share is computed giving effect to all dilutive potential common shares that were outstanding for the period reported. 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 three and six months ended June 30, 2012 and 2011, 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 is anti-dilutive.

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

	June 30, 2012		June 30, 2011
Stock options		2,344,500		1,629,667
Stock warrants		805,521		805,521
Total		3,150,021		2,435,188

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Agreement with Creighton University

6 Months Ended

Jun. 30, 2012

Agreement with Creighton University [Abstract]

AGREEMENT WITH CREIGHTON UNIVERSITY

NOTE 9 – AGREEMENT WITH CREIGHTON UNIVERSITY

On May 26, 2006, SafeStitch LLC 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. The Creighton Agreement does not provide for minimum royalties. 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. The Company recorded research and development costs and expenses related to the 20% facility reimbursement obligation totaling approximately $11,000 and $23,000, respectively for the three and six months ended June 30, 2012, and $11,000 and $21,000, respectively, for the three and six months ended June 30, 2011.

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Commitments and Contingencies (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Commitments and Contingencies (Textual) [Abstract]
Operating Leases			$ 19,000
Creighton Royalty Agreement [Member]
Commitments and Contingencies (Textual) [Abstract]
Operating Leases	73,000	52,000	133,000	105,000
Percentage of royalty of specific product revenue			4.00%
Period of Royalty			10 years
Royalty Incurred	400	0	400	0
Period of supply agreement			12 months
Purchase obligation beyond next twelve months			$ 0

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2012

Property and Equipment [Abstract]

Summary of Property and equipment

	Estimated Useful Lives		June 30, 2012			December 31, 2011
Machinery and equipment		5 years	$	660,000		$	660,000
Furniture, fixtures and leasehold improvements		3-5 years		87,000			81,000
Software		3-5 years		57,000			57,000
				804,000			798,000
Accumulated depreciation and amortization				(412,000	)		(328,000	)
Property and equipment, net			$	392,000		$	470,000

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Property and Equipment (Details) (USD $)	6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Summary of Property and equipment
Property and equipment, Gross	$ 804,000	$ 798,000
Accumulated depreciation and amortization	(412,000)	(328,000)
Property and equipment, net	392,000	470,000
Machinery and Equipment [Member]
Summary of Property and equipment
Estimated Useful Lives	5 years
Property and equipment, Gross	660,000	660,000
Furniture, Fixtures and Leasehold Improvements [Member]
Summary of Property and equipment
Property and equipment, Gross	87,000	81,000
Furniture, Fixtures and Leasehold Improvements [Member] | Maximum [Member]
Summary of Property and equipment
Estimated Useful Lives	5 years
Furniture, Fixtures and Leasehold Improvements [Member] | Minimum [Member]
Summary of Property and equipment
Estimated Useful Lives	3 years
Software [Member]
Summary of Property and equipment
Property and equipment, Gross	$ 57,000	$ 57,000
Software [Member] | Maximum [Member]
Summary of Property and equipment
Estimated Useful Lives	5 years
Software [Member] | Minimum [Member]
Summary of Property and equipment
Estimated Useful Lives	3 years

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Condensed Consolidated Statements of Stockholder's Equity (Deficit) (USD $) In Thousands, except Share data	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. 15, 2005
Capital contributed	$ 1					$ 1
Net loss	(76)						(76)
Ending Balance at Dec. 31, 2005	(75)					1	(76)
Ending Balance, Shares at Dec. 31, 2005
Capital contributed	1,504				11	1,493
Capital contributed, Shares					11,256,000
Net loss	(1,060)						(1,060)
Ending Balance at Dec. 31, 2006	369				11	1,494	(1,136)
Ending Balance, Shares at Dec. 31, 2006					11,256,000
Capital contributed	5,093				5	5,088
Capital contributed, Shares					4,837,000
Net loss	(3,041)						(3,041)
Ending Balance at Dec. 31, 2007	2,421				16	6,582	(4,177)
Ending Balance, Shares at Dec. 31, 2007					16,093,000
Issuance of common shares in private offering	3,988				2	3,986
Issuance of common shares in private offering, Shares					1,862,000
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					8,000
Stock-based compensation	239					239
Net loss	(5,185)						(5,185)
Ending Balance at Dec. 31, 2008	1,473				18	10,817	(9,362)
Ending Balance, Shares at Dec. 31, 2008					17,963,000
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			2,000,000
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		2,000,000			17,963,000
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			2,000,000
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					4,978,000
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				(4,000,000)	4,366,000
Issuance of shares of Common Stock as Consideration Shares					1	(1)
Issuance of shares of Common Stock as Consideration Shares , shares					697,000
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				28	20,427	(17,031)
Ending Balance, Shares at Dec. 31, 2010					28,004,000
Stock-based compensation	335					335
Net loss	(5,758)						(5,758)
Ending Balance at Dec. 31, 2011	(1,999)				28	20,762	(22,789)
Ending Balance, Shares at Dec. 31, 2011					28,004,000
Issuance of shares of Common Stock as Consideration Shares	8,318				21	8,297
Issuance of shares of Common Stock as Consideration Shares , shares					20,794,000
Stock-based compensation	224					224
Net loss	(4,138)						(4,138)
Ending Balance at Jun. 30, 2012	$ 2,405				$ 49	$ 29,283	$ (26,927)
Ending Balance, Shares at Jun. 30, 2012					48,798,000

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Property and Equipment

6 Months Ended

Jun. 30, 2012

Property and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

	Estimated Useful Lives		June 30, 2012			December 31, 2011
Machinery and equipment		5 years	$	660,000		$	660,000
Furniture, fixtures and leasehold improvements		3-5 years		87,000			81,000
Software		3-5 years		57,000			57,000
				804,000			798,000
Accumulated depreciation and amortization				(412,000	)		(328,000	)
Property and equipment, net			$	392,000		$	470,000

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 selling, general and administrative costs and expenses. Depreciation and amortization expense was $42,000 and $84,000, respectively for the three and six months ended June 30, 2012, and was $30,000 and $57,000, respectively for the three and six months ended June 30, 2011.

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Property and Equipment (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Property and Equipment (Textual) [Abstract]
Depreciation and amortization expense	$ 42,000	$ 30,000	$ 84,000	$ 57,000

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Employee Benefit Plans (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Employee Benefit Plans (Textual) [Abstract]
Employee contribution to annual compensation			100.00%
Employer contribution matching plan			100.00%
Percentage of participant's qualified annual earnings			4.00%
Expenses recorded related to plan	$ 4,000	$ 9,000	$ 15,000	$ 19,000

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Use of estimates

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

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

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. Inventories are stated at lower of cost or market using the weighted average cost method and are evaluated for impairment when conditions exist that suggests impairment may be necessary. The $1.6 million inventory balance at June 30, 2012 consists of $972,000 in components, $671,000 in finished units of the AMID HFD and $3,000 in standard mesh. Scrap materials and quality testing costs are included in Cost of Goods Sold (“COGS”), as incurred. Provisions for potentially obsolete or slow-moving inventory are made based on management’s analysis of inventory levels, obsolescence and future sales forecasts.

Property and equipment

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 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

Advertising Costs. The Company expenses all costs of advertising as incurred. Advertising and promotional costs are included in selling, general and administrative costs and expenses for all periods presented, and totaled $45,000 and $83,000, respectively, for the three and six months ended June 30, 2012. Advertising and promotional costs and expenses totaled $0 and $9,000, respectively, for the three and six months ended June 30, 2011.

Research and development

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

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

Stock-based compensation. The Company accounts for all share-based payments to employees and directors, based on their grant date fair values. Compensation for share-based payments to non-employees is based on the fair value at the measurement date, which is generally the performance completion date. The fair value is initially measured at the grant date and subsequently measured at each reporting period until the final measurement date. 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

Consolidation. The condensed 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.

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

Fair value of financial instruments

Fair value of financial instruments. The carrying amounts of cash and cash equivalents, accounts payable, accrued expenses and notes payable approximate fair value based on their short-term maturity. Related party receivables and stockholder loans are carried at cost.

Long-lived assets

Long-lived assets. The Company reviews the carrying values of its long-lived assets 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

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 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). 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, and, as a result, no statement of comprehensive income (loss) has been included in the condensed consolidated financial statements.