The revolver provides for borrowings up to 80% of eligible accounts receivable and 50% of eligible raw materials inventory.  The interest rate on the revolver is calculated at the bank's prime rate plus 0.25% (3.50% at March 31,June 30, 2015). The revolver has aoriginal maturity date of the revolver was June 30, 2015, and istherefore, as of December 31, 2014 the balance of the revolver was classified as a current liability. In June 2015, the revolver was extended for an additional two-year period maturing June 30, 2017 and is therefore classified as a long-term liability on the Company's balance sheet at March 31, 2015.

In December 2013, the Company completed a private offering in which the Company sold an aggregate of $500,000 in subordinated promissory notes. The notes are unsecured and require quarterly interest-only payments at a rate of 10% per annum. On the second anniversary following issuance, the interest rate increases to 12% per annum. The notes mature in December 2016 at which point the outstanding balance is due in full. The subordinated promissory notes may be prepaid by the Company at any time following the first anniversary thereof without penalty. The notes are subordinated to all indebtedness of the Company pursuant to the bank credit facility.

In the ordinary course of its business, the Company is involved in various legal proceedings involving a variety of matters. The Company does not believe there are any pending legal proceedings that will have a material impact on the Company’s financial position or results of operations.

The following table sets forth the stock option transactions for the threesix months ended March 31,June 30, 2015:

For the threesix months ended March 31,June 30, 2015 and 2014, share-based compensation expense related to stock options amounted to $7,186$19,888 and $11,250,$26,548, respectively, and is included in general and administrative expenses.

For the threesix months ended March 31,June 30, 2015, 25,000 options were granted, 7,500 options were forfeited. Additionally, 1,1008,200 options were exercised generating proceeds of $3,880.$28,611.

For the threesix months ended March 31,June 30, 2014, there we no new grants no exercises and 56,500 sharesoptions expired. Additionally, 9,600 options were exercised generating proceeds of $25,575.

This Quarterly Report on Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. There are a number of factors that could cause the Company’s actual results to differ materially from those forecasted or projected in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Company is under no obligation and does not intend to update, revise or otherwise publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of any unanticipated events.  More information about factors that potentially could affect the Company's financial results is included in the Company's filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2014.

The Company discontinued operations of its wholly-owned Pennsylvania subsidiary, RMDDxUSA Corp. ("RMDDxUSA") and that subsidiary's Prince Edward Island subsidiary, RMDDx Corporation ("RMDDx" and collectively with RMDDxUSA, “WirelessDx”) in the third quarter of 2012. The results of WirelessDx are presented as discontinued operations throughout the financial statements and footnotes in this Form 10-Q.

On May 8, 2014, RMDDxUSA filed a voluntary petition for relief under Chapter 7 (Liquidation) of the United States Bankruptcy Code in the District of Massachusetts and a trustee was assigned to review the assets and liabilities of the company. On March 20, 2015, the Chapter 7 Orderdischarge order was formally dischargedissued by the assigned trustee and the case was closed.

The following table sets forth for the periods indicated, the percentages of the net sales represented by certain items reflected in the Company's statements of operations.

The Company's consolidated net sales for the three months ended March 31,June 30, 2015 was $5,858,342,$5,659,094, a decrease of $171,501,$594,663, or 2.8%9.5%, when compared to the consolidated net sales of $6,029,843$6,253,757 for the three months ended March 31,June 30, 2014.

The decreasedecreases in net sales of machined orthopedic implants was due to some production issues encountered as the Company continued efforts to implement lean manufacturing practices in this product line. Additionally, 2014 benefited from $250,000 of Predictor license sales.

The increaseCompany's consolidated net sales for the six months ended June 30, 2015 was $11,517,436, a decrease of $766,164, or 6.2%, when compared to the consolidated net sales of $12,283,600 for the six months ended June 30, 2014.

Gross profit for the six months ended June 30, 2015 was $1,828,550, a decrease of $616,759, or 25.2%, when compared to gross profit of $2,445,309 for the same period in 2014. Gross profit as a percentage of sales decreased 4.0 points from 19.9% for the six months ended June 30, 2014. The decrease in gross profit was due primarily to an 8.6 point decrease in gross margin related to orthopedic implant components as a result of both product mix as well as production delays encountered in the first quarter of 2015. For the six months ended June 30, 2014, gross profit included $250,000 from net sales of Predictor licenses. Additionally, increased expenditures of $253,840 in the Company's manufacturing quality function to support its growth strategy in the six months ended June 30, 2015, resulted in a decrease to gross profit when compared to the prior period.

The Company's consolidated selling and marketing expenses amounted to $257,972 (4.4%$262,609 (4.6% of net sales) for the three months ended March 31,June 30, 2015 as compared to $291,672 (4.8%$240,408 (3.8% of net sales) for the three months ended March 31,June 30, 2014, a decreasean increase of $33,700,$22,201, or 11.6%9.2%.  For the three months ended March 31,June 30, 2015, marketing and travel expenses increased $14,769 due in part to travel to trade shows related to the Company's orthopedic implant components. The increase was also due in part to the impact of a second quarter 2014 refund of a consulting fee incurred in 2013. These increases were partially offset by a decrease in commissions of $11,627 due to lower net sales as compared to the same period in the prior year.

The Company's consolidated selling and marketing expenses amounted to $520,581 (4.5% of net sales) for the six months ended June 30, 2015 as compared to $532,080 (4.3% of net sales) for the six months ended June 30, 2014, a decrease of $11,499, or 2.2%.  For the six months ended June 30, 2015, travel expenses decreased $21,051$15,293 due in part to decreased international travel and travel to trade shows as well as decreased trade show expense of $7,290.shows. Additionally, commissions decreased $4,213$15,840 due to lower net sales.sales as compared to the same period in the prior year. These decreases were partially offset by the impact of a second quarter 2014 refund of a consulting fee incurred in 2013.

The Company's consolidated general and administrative expenses increaseddecreased to $648,227 (11.1%$525,577 (9.3% of net sales) for the three months ended March 31,June 30, 2015 as compared to $594,631 (9.9%$543,235 (8.7% of net sales) for the three months ended March 31,June 30, 2014, an increasea decrease of $53,596,$17,658, or 9.0%3.3%.  

The Company's consolidated general and administrative expenses increased to $1,173,804 (10.2% of net sales) for the six months ended June 30, 2015 as compared to $1,137,866 (9.3% of net sales) for the six months ended June 30, 2014, an increase of $35,938, or 3.2%.   The increase in consolidated general and administrative expenses for the six months ended June 30, 2015 was due in part to $22,761 related to the engagement of an investor relations firm in the second quarter ofJune 2014. Wages, taxes, and benefits increased $18,242 due in part to increases in executive compensation which were effective January 1, 2015. Additionally, accounting fees and other related costs increased $17,034,$19,745, due in part to increased software expenses as well as costs related to insuring the Company's trade accounts receivable. Consulting fees also increased $8,786$10,418 due largely to professional services related to environmental, healthstrategic planning. Insurance expense increased $12,398 due to general property and safety.    liability insurance policy renewals. Additionally, the Company incurred an aggregate increase of approximately $15,000 in wages, taxes, and benefits, legal expenses and directors' compensation. These increases were partially offset by $35,000 less in bonus accruals as well as a reduction in bank fees of $10,283 over the same period in the prior year.

The Company's consolidated research and development expenses decreased to $92,561 (1.6%$62,224 (1.1% of net sales) for the three months ended March 31,June 30, 2015 as compared to $96,827 (1.6%$85,694 (1.4% of net sales) for the three months ended March 31,June 30, 2014, a decrease of $4,266,$23,470, or 4.4%27.4%. The decrease is due to a decrease of $25,604 for internal research and development costs for the development of new products and capabilities related to medical device components.

The Company's consolidated research and development expenses decreased to $154,785 (1.3% of net sales) for the six months ended June 30, 2015 as compared to $182,521 (1.5% of net sales) for the six months ended June 30, 2014, a decrease of $27,736, or 15.2%. The net decrease is due to a reduction in wages, taxes and benefits of $28,217$38,950 due primarily to turnover of two employees partially offset by an increase of $25,604$10,263 for internal research and development costs for the development of new products and capabilities related to medical device components.

The Company has also dedicated resources to customer funded research and development of new products in the military and law enforcement industry.

The tax provisions for the three and six months ended March 31,June 30, 2015 and 2014 are attributable to the U.S. federal state and foreignstate income taxes on our continuing operations. The Company’s combined federal and state effective income tax rate from continuing operations for both the three and six months ended March 31,June 30, 2015 and 2014 was 0%. due to the expected utilization of deferred tax assets previously reserved for with a valuation allowance.

On May 8, 2014, RMDDxUSA filed a voluntary petition for relief under Chapter 7 (Liquidation) of the United States Bankruptcy Code in the District of Massachusetts and a trustee was assigned to review the assets and liabilities of the company. On March 20, 2015, the Chapter 7 Orderdischarge order was formally dischargedissued by the assigned trustee and the case was closed.

Consolidated basic and diluted earnings per share for the three months ended March 31,June 30, 2015 was $0.04 per share as compared to $0.09 per share for the same period in 2014, a decrease of $0.05 per share. The decrease in earnings per share is due largely to the decrease in net sales of orthopedic implant components as well as the lack of net sales of Predictor licensessensors in the three months ended March 31,June 30, 2015 versus the same period in 2014, partially offset by increased net sales in custom thermoplastic injection molding.

Consolidated basic and diluted earnings per share for the six months ended June 30, 2015 was $0.08 per share as compared to $0.18 per share for the same period in 2014, a decrease of $0.10 per share. The decrease in earnings per share is due largely to the decrease in net sales of sensors and orthopedic implant components partially offset by the impact of other income from discontinued operations as a result of the final discharge order related to the bankruptcy of RMDDxUSA.RMDDxUSA as well as the lack of net sales of Predictor licenses in the six months ended June 30, 2015 versus the same period in 2014.

Basic and diluted loss per share from continuing operations for the threesix months ended March 31,June 30, 2015 was $0.09$0.05 per share as compared to basic and diluted earnings per share from continuing operations of $0.09$0.18 per share for the same period insix months ended June 30, 2014, a decrease in earningsof $0.23 per share, of $0.18, due largely to the decrease in net sales of sensors and orthopedic implant components as well as the lack of net sales of Predictor licenses.

Basic and diluted earnings per share from discontinued operations, for the three and six months ended March 31,June 30, 2015 was $0.00 per share and $0.13 per share, respectively as compared to basic and diluted earnings per share from discontinued operations of $0.00 per share for the same periodperiods in 2014, an increase in earnings per share of $0.13, due to the final discharge order related to the bankruptcy of RMDDxUSA.RMDDxUSA issued in 2015.

Working capital was $1,367,660$3,953,865 as of March 31,June 30, 2015, as compared to $1,308,472 at December 31, 2014, an increase of $59,188.$2,645,393.  The increase is due primarily to the reclassification of the revolver from current liabilities to long-term liabilities, increases in accounts receivable and cash, partially offset by increased accounts payable and accrued expenses and other current liabilities.

Inventories were $2,526,188$2,490,723 at March 31,June 30, 2015, as compared to $2,514,241 at December 31, 2014, an increasea decrease of $11,947.$23,518.  Raw materials increased $254,221decreased $41,511 due to timinghigh usage levels during the second quarter of resin receipts at quarter end for April 2015 orders.in custom thermoplastic injection molding. As onan offset, work in progress decreased $36,073increased $13,062 and finished goods decreased $206,201,increased $4,931, due to larger shipments in the quarter end shipments.ended June 30, 2015.

Accounts payable increased $411,677$325,282 due in part to purchases of raw material inventory driven by increased demand in custom thermoplastic injection molding.

Accrued expenses and other current liabilities increased $357,803$283,897 as compared to December 31, 2014 and isas discussed below in the detail in Operating Cash Flows.

The revolver provides for borrowings up to 80% of eligible accounts receivable and 50% of eligible raw materials inventory.  The interest rate on the revolver is calculated at the bank's prime rate plus 0.25% (3.50% at March 31,June 30, 2015). The

In December 2013, the Company completed a private offering in which the Company sold an aggregate of $500,000 in subordinated promissory notes. The notes are unsecured and require quarterly interest-only payments at a rate of 10% per annum. On the second anniversary following issuance, the interest rate increases to 12% per annum. The notes mature in December 2016 at which point the outstanding balance is due in full. The subordinated promissory notes may be prepaid by the Company at any time following the first anniversary thereof without penalty. The notes are subordinated to all indebtedness of the Company pursuant to the bank credit facility.

The borrowing agreement, under the bank facility as described above, contains both financial and non-financial covenants. The financial covenants include maintaining certain debt coverage and leverage ratios. The non-financial covenants relate to various matters including notice prior to executing further borrowings and security interests, mergers or consolidations, acquisitions, guarantees, sales of assets other than in the normal course of business, leasing, changes in ownership and payment of dividends.

No dividends were declared or paid in the threesix months ended March 31,June 30, 2015 and 2014.

As of March 31,June 30, 2015, the Company had cash on hand of $391,382.$284,774. For the threesix months ended March 31,June 30, 2015, net cash provided by operating activities was $275,102.$322,045. Net cash used in investing activities for the threesix months ended March 31,June 30, 2015 was $226,447.$768,985. Net cash provided by financing activities for the threesix months ended March 31,June 30, 2015 was $133,329.$522,316. All of the above were from continuing operations. The net cash flows for the threesix months ended March 31,June 30, 2015 are discussed in further detail below.

For the threesix months ended March 31,June 30, 2015, net cash provided by financing activities was $133,329.$522,316. Cash was provided by proceeds of $250,000$320,000 from the Company's revolver and proceeds from the equipment line of credit of $415,785, offset by payments on term notes payable of $120,551.$242,080. Additionally, there were proceeds of $3,880$28,611 from the exercise of stock options.