Document_and_Entity_Informatio
Document and Entity Information Document | 9 Months Ended | |
Sep. 30, 2013 | Nov. 18, 2013 | |
Document Information [Line Items] | ' | ' |
Entity Registrant Name | 'Arrhythmia Research Technology Inc /DE/ | ' |
Entity Central Index Key | '0000819689 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Amendment Flag | 'false | ' |
Entity Common Stock, Shares Outstanding | ' | 2,704,239 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Current assets: | ' | ' |
Cash and cash equivalents | $455,817 | $477,708 |
Restricted Cash | 1,000,000 | 0 |
Trade and othe accounts receivable, net of allowance for doubtful accounts of $40,000 and $117,098, respectively | 2,541,889 | 3,181,721 |
Inventories, net | 2,654,011 | 2,415,104 |
Deferred income taxes | 0 | 199,432 |
Income tax receivable | 127,961 | 194,912 |
Deposits, prepdaid expenses and other current assets | 689,596 | 574,999 |
Current assets from discontinued operations | 4,285 | 34,301 |
Total current assets | 7,473,559 | 7,078,177 |
Property, plant and equipment, net | 7,545,275 | 7,158,512 |
Other intangible assets, net | 183,467 | 156,091 |
Long-term deferred tax assets, net | 0 | 2,068,538 |
Other non-current assets | 258,767 | 214,596 |
Non-current assets from discontinued operations | 0 | 284,300 |
Total assets | 15,461,068 | 16,960,214 |
Current liabilities: | ' | ' |
Demand line of credit | 0 | 800,000 |
Equipment line of credit | 177,251 | ' |
Current portion of long-term debt | 280,006 | 0 |
Current portion of equipment notes | 51,108 | 267,043 |
Accounts payable | 2,540,359 | 2,437,778 |
Accrued expenses | 619,756 | 393,913 |
Customer deposits | 19,509 | 121,779 |
Current portion of deferred revenue | 269,498 | 315,268 |
Performance guarantee liability | 1,000,000 | 1,000,000 |
Current liabilities from discontinued operations | 319,937 | 600,571 |
Total current liabilities | 5,277,424 | 5,936,352 |
Long-term liabilities: | ' | ' |
Revolving line of credit | 2,399,493 | 0 |
Long-term debt, net of current portion | 1,083,903 | 0 |
Long-term equipment note, net of current portion | 183,538 | 991,213 |
Long-term portion of deferred gain on lease | 0 | 8,934 |
Long-term deferred revenue, net of current portion | 240,744 | 326,982 |
Total long-term liabilities | 3,907,678 | 1,327,129 |
Total liabilties | 9,185,102 | 7,263,481 |
Shareholders’ equity: | ' | ' |
Preferred stock, $1 par value; 2,000,000 shares authorized, none issued | 0 | 0 |
Common stock, $0.01 par value; 10,000,000 shares authorized, 3,926,491 shares issued, 2,704,239 shares outstanding | 39,265 | 39,265 |
Additional paid-in-capital | 11,151,221 | 11,110,575 |
Common stock held in treasury, 1,222,252 shares at cost | -3,335,268 | -3,335,268 |
Accumulated other comprehensive income | 42,502 | 42,502 |
Retained (deficit) earnings | -1,621,754 | 1,839,659 |
Total shareholders' equity | 6,275,966 | 9,696,733 |
Total liabilities and shareholders' equity | $15,461,068 | $16,960,214 |
Consolidated_Balance_Sheet_Par
Consolidated Balance Sheet Parenthetical (Parentheticals) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Allowance for Doubtful Accounts Receivable | $40,000 | $117,098 |
Preferred stock, par value | $1 | $1 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Common Stock, Par or Stated Value per Share | $0.01 | $0.01 |
Common Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Common Stock, Shares, Issued | 3,926,491 | 3,926,491 |
Common Stock, Shares, Outstanding | 2,704,239 | 2,790,514 |
Treasury Stock, Shares | 1,222,252 | 1,222,252 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Net revenues | $4,728,217 | $4,959,034 | $15,251,851 | $15,585,157 |
Cost of sales | 4,178,406 | 4,197,937 | 13,192,226 | 12,884,526 |
Gross profit | 549,811 | 761,097 | 2,059,625 | 2,700,631 |
Selling and marketing | 209,498 | 186,178 | 696,712 | 692,272 |
General and administrative | 727,664 | 720,515 | 2,037,139 | 2,141,089 |
Research and development | 131,077 | 115,034 | 251,772 | 380,266 |
Goodwill impairment | 0 | 1,479,727 | 0 | 1,479,727 |
Total operating expense | 1,068,239 | 2,501,454 | 2,985,623 | 4,693,354 |
Loss from operations | -518,428 | -1,740,357 | -925,998 | -1,992,723 |
Interest expense | -51,393 | -7,969 | -258,940 | -14,855 |
Other income (expense), net | 293 | -359 | 8,063 | -8,276 |
Other expense, net | -51,100 | -8,328 | -250,877 | -23,131 |
Loss from continuing operations before income tax (benefit) provision | -569,528 | -1,748,685 | -1,176,875 | -2,015,854 |
Income tax (benefit) provision | 0 | -296,133 | 2,267,969 | -609,623 |
Loss from continuing operations | -569,528 | -1,452,552 | -3,444,844 | -1,406,231 |
Discontined Operations: | ' | ' | ' | ' |
Income (Loss) from discontinued operations, net of tax provision of $0 and $0, respectively, for the three and nine months ended September 30, 2013 and a tax benefit of $1,190,580 and $1,731,580, respectively, for the three and nine months ended September 30, 2012 | 3,977 | -1,996,055 | -16,569 | -3,523,380 |
Net loss | ($565,551) | ($3,448,607) | ($3,461,413) | ($4,929,611) |
Loss per share - basic and diluted | ' | ' | ' | ' |
Continuing operations | ($0.21) | ($0.52) | ($1.27) | ($0.50) |
Discontinued operations | $0 | ($0.72) | ($0.01) | ($1.26) |
Loss per share - basic and diluted | ($0.21) | ($1.24) | ($1.28) | ($1.76) |
Weighted average common shares outstanding - basic and diluted | 2,704,239 | 2,790,514 | 2,704,239 | 2,790,514 |
Consolidated_Statements_of_Ope1
Consolidated Statements of Operations Parenthetical (Parentheticals) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Income Tax Expense (Benefit) | $0 | $0 | ($1,190,580) | ($1,731,580) |
Statement_of_Changes_in_Shareh
Statement of Changes in Shareholders' Equity (USD $) | Total | Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated other comprehensive income | Retained Earnings |
Stockholders' Equity Attributable to Parent at Dec. 31, 2012 | $9,696,733 | $39,265 | $11,110,575 | ($3,335,268) | $42,502 | $1,839,659 |
Shares at Dec. 31, 2012 | 3,926,491 | 3,926,491 | ' | 1,222,252 | ' | ' |
Share-based compensation | 40,646 | ' | 40,646 | ' | ' | ' |
Net loss | -3,461,413 | ' | ' | ' | ' | -3,461,413 |
Stockholders' Equity Attributable to Parent at Sep. 30, 2013 | $6,275,966 | $39,265 | $11,151,221 | ($3,335,268) | $42,502 | ($1,621,754) |
Shares at Sep. 30, 2013 | 3,926,491 | 3,926,491 | ' | 1,222,252 | ' | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Cash flows from operating activities: | ' | ' |
Net loss | ($3,461,413) | ($4,929,611) |
Loss from discontinued operations | 16,569 | 3,523,380 |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ' | ' |
Gain (loss) on sale if fixed assets | 174 | 0 |
Amortization of the gain on lease | -8,934 | -3,350 |
Goodwill impairment | 0 | 1,479,727 |
Depreciation and amortization | 1,074,339 | 1,074,764 |
Changes in allowance for doubtful accounts | -77,098 | 45,000 |
Deferred income taxes | 2,267,969 | -605,123 |
Share-based compensation | 40,646 | 84,650 |
Changes in operating assets and liabilities: | ' | ' |
Trade accounts receivable | 716,930 | 194,148 |
Inventories | -238,907 | 47,002 |
Deposits, prepaid expenses and other assets | -91,817 | -476,528 |
Accounts payable | 102,581 | 405,665 |
Accrued expenses and other liabilities | -8,435 | 176,506 |
Net cash provided by operating activities of continuing operations | 332,604 | 1,016,230 |
Net cash used in operating activities of discontinued operations | -277,215 | -2,514,591 |
Net cash provided by (used in) operating activities | 55,389 | -1,498,361 |
Cash flows from investing activities: | ' | ' |
Purchases of property, plant and equipment | -1,200,346 | -893,887 |
Proceeds from sale of fixed asset | 1,528 | 306,285 |
Cash paid for patents and trademarks | -33,902 | 0 |
Net cash used in investing activities of continuing operations | -1,232,720 | -587,602 |
Net cash provided by (used in) investing activities of discontinued operations | 284,300 | -484,481 |
Net cash used in investing activities | -948,420 | -1,072,083 |
Cash flows from financing activities: | ' | ' |
Proceeds from revolving line of credit | 2,399,493 | 0 |
Proceeds from (payments on) demand line of credit, net | -800,000 | 800,000 |
Proceeds from equipment line of credit | 177,251 | 0 |
Proceeds from long-term debt | 1,500,000 | 0 |
Payments on long-term debt | -136,091 | 0 |
Proceeds from equipment notes | 0 | 262,960 |
Payments on equipment notes | -1,296,110 | -48,119 |
Cash dividend paid | 0 | -84,119 |
Restricted cash | -1,000,000 | 0 |
Net cash provided by financing activities of continuing operations | 844,543 | 930,722 |
Net cash (used in) provided by financing activities of discontinued operations | 0 | 631,897 |
Net cash provided by financing activities | 844,543 | 1,562,619 |
Net decrease in cash and cash equivalents | -48,488 | -1,007,825 |
Cash and cash equivalents at beginning of period, (including $30,882 and $102,972 of cash of discontinued operations) | 508,590 | 1,358,223 |
Cash and cash equivalents at end of period | 460,102 | 350,398 |
Less cash and cash equivalents of discontinued operations at end of period | -4,285 | -72,021 |
Cash and cash equivalents of continuing operations at end of period | 455,817 | 278,377 |
Supplemental Cash Flow Information [Abstract] | ' | ' |
Cash Paid for Interest | 91,751 | 15,097 |
Proceeds from Income Tax Refunds | 66,951 | 0 |
Acquisition of equipment with equipment notes | $272,500 | $476,687 |
Consolidated_Statements_of_Cas1
Consolidated Statements of Cash Flows (Parentheticals) Statement (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Consolidated Statements of Cash Flows Parenthetical [Abstract] | ' | ' |
Cash and cash equivalents, discontinued operations | $30,882 | $102,972 |
Note_1_Basis_of_Presentation
Note 1. Basis of Presentation | 9 Months Ended |
Sep. 30, 2013 | |
Basis of Presentation [Abstract] | ' |
Basis of Presentation | ' |
Basis of Presentation | |
The unaudited interim consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Accordingly, certain information and footnote disclosures normally included in complete financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been omitted pursuant to such rules and regulations. The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Arrhythmia Research Technology, Inc. ("ART") and subsidiaries (the “Company”) Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on May 31, 2013. | |
The information presented reflects, in the opinion of the management of the Company, all adjustments necessary for a fair presentation of the financial results for the interim periods presented. | |
Use of estimates | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating results for interim periods are not necessarily indicative of results that may be expected for the entire fiscal year. | |
Operating matters and liquidity | |
The Company expects that its current and anticipated financial resources, including the Company's bank facility, are adequate to maintain current and planned operations through September 30, 2014. The multi-year credit facility entered into on March 29, 2013, includes a revolving line of credit of up to $4.0 million, a commercial term loan of $1.5 million and an equipment line of credit of $1.0 million (see Note 5). | |
The Company believes that cash flows from its operations, together with its existing working capital and other resources, will be sufficient to fund operations at current levels and repay debt obligations over the next twelve months. The Company expects improvements in sales within new and existing channels to continue as a result of the Company's prior and future investments in capital equipment and human resources. The Company expects to meet its goals in these areas, realize returns on its capital investments over the last nine months and generate the additional cash needed to fund operations into 2014 and beyond; however, there can be no assurance that the Company will be able to do so. |
Note_2_Accounting_Policies_Not
Note 2. Accounting Policies (Notes) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||||||
Accounting Policies | ' | ||||||||||||||||||||
Accounting Policies | |||||||||||||||||||||
Principles of Consolidation | |||||||||||||||||||||
The consolidated financial statements include the accounts of ART and its wholly owned subsidiary, Micron Products, Inc. ("Micron"). The Company's Pennsylvania subsidiary, RMDDxUSA Corp., and its Prince Edward Island subsidiary, RMDDx Corporation, collectively "WirelessDx", discontinued operations in the third quarter of 2012 and are presented herein as discontinued operations. All intercompany balances and transactions have been eliminated in consolidation. | |||||||||||||||||||||
Revenue Recognition | |||||||||||||||||||||
Revenue is recorded when all criteria for revenue recognition have been satisfied, which is generally when goods are shipped to the Company's customers. Product revenue is recognized in the period when persuasive evidence of an arrangement with a customer exists, the products are shipped and title has transferred to the customer, the price is fixed or determined and collection is probable. | |||||||||||||||||||||
The Company enters into arrangements containing multiple elements which may include a combination of the sale of molds, tooling, engineering and validation services and production units. The Company has determined that the sale of certain molds, tooling, engineering and validation services, and the production units, represent one unit of accounting, based on an assessment of the respective standalone value, as defined in ASC 605-25, “Revenue Recognition: Multiple - Element Arrangements.” | |||||||||||||||||||||
The Company determines the estimated product life-cycle, based upon historical knowledge of the customer, over which the deferred revenue will be amortized into revenue, which is generally three years. The Company carries prepaid tooling costs associated with the related arrangement as other assets on the Company's balance sheet. These costs are amortized to expense at the same time as the deferred revenue is amortized into revenue. | |||||||||||||||||||||
The Company cannot effectively predict short-term or long-term production volume in a consistent and meaningful manner due to the nature of these molds, associated products and customer ordering patterns. Therefore, the Company is unable to account for the transactions under the Units of Production method and management has determined the most appropriate amortization method to be the straight-line method. | |||||||||||||||||||||
The Company also recognizes revenue in accordance with ASC 985-605 "Software - Revenue Recognition" for software licenses it sells. Revenue is recognized when licenses are sold as the revenue cycle is completed with no warranty, returns or technical support to customers. Total revenue from software sales was immaterial in relation to consolidated revenues. | |||||||||||||||||||||
Fair value of financial instruments | |||||||||||||||||||||
The carrying amount reported in the balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the immediate or short-term nature of such instruments. The carrying value of debt approximates fair value since it provides for market terms and interest rates. | |||||||||||||||||||||
Concentration of credit risk | |||||||||||||||||||||
Financial instruments, which potentially expose the Company to concentrations of credit risk, consist primarily of trade accounts receivable and cash. | |||||||||||||||||||||
Accounts receivable are customer obligations due under normal trade terms. A large portion of the Company's products are sold to large diversified medical and defense product manufacturers. The Company does not generally require collateral for its sales; however, the Company believes that its terms of sale provide adequate protection against significant credit risk. Currently, the Company generally does not receive purchase volume commitments extending beyond several months. Large corporations can shift focus away from a need for the Company’s products and services with little or no warning. The loss of any one or more of these customers may have an immediate significant adverse effect on our financial results. | |||||||||||||||||||||
It is the Company’s policy to place its cash in high quality financial institutions. The Company does not believe significant credit risk exists above federally insured limits with respect to these institutions. | |||||||||||||||||||||
Cash and cash equivalents | |||||||||||||||||||||
Cash and cash equivalents consist of cash on hand and on deposit in high quality financial institutions with maturities of three months or less at the time of purchase. | |||||||||||||||||||||
Restricted cash | |||||||||||||||||||||
Restricted cash consists of cash on deposit at the Bank of Nova Scotia in lieu of a letter of credit associated with a performance guarantee liability (Note 9). | |||||||||||||||||||||
Allowance for doubtful accounts | |||||||||||||||||||||
Management regularly reviews accounts receivable to determine if any receivables will potentially be uncollectible. The Company includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve, in the Company's overall allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Based on the information available to the Company, management believes the allowance for doubtful accounts of $40,000 and $117,098 as of September 30, 2013 and December 31, 2012, respectively, are adequate. | |||||||||||||||||||||
Inventories | |||||||||||||||||||||
The Company values its inventory at the lower of average cost, first-in-first-out (FIFO) or net realizable value. The Company reviews its inventory for quantities in excess of production requirements, obsolescence and for compliance with internal quality specifications. Any adjustments to inventory would be equal to the difference between the cost of inventory and the estimated net market value based upon assumptions about future demand, market conditions and expected cost to distribute those products to market. The Company records adjustments to account for potential scrap during normal manufacturing operations or potential obsolescence for slow moving inventory. | |||||||||||||||||||||
Property, plant and equipment | |||||||||||||||||||||
Property, plant and equipment are recorded at cost and include expenditures which substantially extend their useful lives. Depreciation on property, plant and equipment is calculated using the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and repairs are charged to earnings as incurred. When equipment is retired or sold, the resulting gain or loss is reflected in earnings. | |||||||||||||||||||||
Long-lived and intangible assets | |||||||||||||||||||||
The Company assesses the impairment of long-lived assets and intangible assets with finite lives whenever events or changes in circumstances indicate that the carrying value may not be fully recoverable. Intangible assets consist of the following: | |||||||||||||||||||||
September 30, 2013 | December 31, 2012 | ||||||||||||||||||||
Estimated Useful Life (in years) | Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | |||||||||||||||
Patents and Trademarks | 13 | $ | 443,201 | $ | (420,936 | ) | $ | 22,265 | $ | 480,750 | $ | (456,361 | ) | $ | 24,389 | ||||||
Patents and Trademarks* | — | 141,923 | — | 141,923 | 110,702 | — | 110,702 | ||||||||||||||
Trade names | 8 | 33,250 | (13,971 | ) | 19,279 | 33,250 | (12,250 | ) | 21,000 | ||||||||||||
Total Intangible assets: | $ | 618,374 | $ | (434,907 | ) | $ | 183,467 | $ | 624,702 | $ | (468,611 | ) | $ | 156,091 | |||||||
* Patents and Trademarks not yet in service. | |||||||||||||||||||||
Income taxes | |||||||||||||||||||||
The Company accounts for income taxes in accordance with ASC 740 “Income Taxes,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using tax rates in effect for the year in which the differences are expected to reverse. | |||||||||||||||||||||
As of June 30, 2013, the Company had recorded twelve consecutive quarters of pre-tax losses. Additionally, management’s projections of future income in the face of challenging market conditions, and the impact of identified tax planning strategies, creates uncertainty regarding the Company's ability to realize its deferred tax assets pursuant to the “more-likely-than-not” standard, as defined in ASC 740-10-30-5. Accordingly, in the second quarter the Company recorded tax expense of $2,267,969 to establish a full valuation allowance on its deferred tax assets. | |||||||||||||||||||||
Management evaluated and weighted all available evidence, both positive and negative, through June 30, 2013, and determined that the weight of negative evidence occurring in the second quarter made it difficult to form a supportable conclusion that a valuation allowance was not needed. Factors such as projected increases in cost of sales, overall sales volumes from key customers and the continued volatility in the silver market negatively impacted the second quarter re-forecast of pre-tax earnings and the analysis of future taxable income. Consequently, management determined that the Company could not support the realization of its deferred tax assets, at a more-likely-than-not standard, and identified the second quarter of 2013 as the appropriate period to record a full valuation allowance, on its deferred tax assets of $2,267,969. Management determined that no change was necessary for the three months ended September 30, 2013. | |||||||||||||||||||||
Share-based compensation | |||||||||||||||||||||
Share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant). | |||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||
The Company has accumulated comprehensive income of $42,502 from changes in currency valuations with our discontinued Canadian operations as of September 30, 2013 and December 31, 2012. There were no changes in comprehensive income in the three or nine months ended September 30, 2013. | |||||||||||||||||||||
(Loss) earnings per share data | |||||||||||||||||||||
Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding. The computation of diluted earnings per share is similar to the computation of basic earnings per share except that the denominator is increased to include the average number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. In addition, the numerator is adjusted for any changes in income that would result from the assumed conversions of those potential shares. As of September 30, 2013 and December 31, 2012 there were 226,500 and 285,000 options outstanding, respectively, that were anti-dilutive and were not included in the calculation of earnings or loss per share. | |||||||||||||||||||||
Basic and diluted EPS computations are as follows: | |||||||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||
2013 | 2012 Revised | 2013 | 2012 Revised | ||||||||||||||||||
Net loss available to common shareholders | $ | (565,551 | ) | $ | (3,448,607 | ) | $ | (3,461,413 | ) | $ | (4,929,611 | ) | |||||||||
Weighted average common shares outstanding | 2,704,239 | 2,790,514 | 2,704,239 | 2,790,514 | |||||||||||||||||
Loss per share - basic and diluted | |||||||||||||||||||||
Continuing operations | (0.21 | ) | (0.52 | ) | (1.27 | ) | (0.50 | ) | |||||||||||||
Discontinued operations | — | (0.72 | ) | (0.01 | ) | (1.26 | ) | ||||||||||||||
Loss per share - basic and diluted | $ | (0.21 | ) | $ | (1.24 | ) | $ | (1.28 | ) | $ | (1.76 | ) | |||||||||
Segments | |||||||||||||||||||||
In 2012, the Company determined that the Company's results will be reported as one segment due to the discontinued operations of its WirelessDx segment and since the results of its previously reported ART segment were not quantitatively material and were not regularly reviewed by the Chief Operating and Decision Maker ("CODM"). | |||||||||||||||||||||
Research and development | |||||||||||||||||||||
Research and development expenses include costs directly attributable to the conduct of research and development programs primarily related to the development of our software products and improving the efficiency and capabilities of our manufacturing processes. Such costs include salaries, payroll taxes, employee benefit costs, materials, supplies, depreciation on research equipment, and services provided by outside contractors. All costs associated with research and development programs are expensed as incurred. | |||||||||||||||||||||
Reclassifications | |||||||||||||||||||||
Certain reclassifications have been made to prior period amounts to conform to the current period presentation. In 2012, the Company revised prior period balances to correct errors in the revenue recognition of certain Tooling transactions (Note 10). |
Note_3_Inventories
Note 3. Inventories | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Inventories [Abstract] | ' | |||||||
Inventories | ' | |||||||
Inventories | ||||||||
Inventories consist of the following: | ||||||||
September 30, | December 31, 2012 | |||||||
2013 | ||||||||
Raw materials | $ | 1,062,042 | $ | 521,908 | ||||
Work-in-process | 302,891 | 248,159 | ||||||
Finished goods | 1,289,078 | 1,645,037 | ||||||
Total | $ | 2,654,011 | $ | 2,415,104 | ||||
The value of silver in inventory at September 30, 2013 and December 31, 2012 as a part of finished goods as plated sensors, work in process, or raw materials was $446,664 and $541,804, respectively. Inventories are stated at their net realizable value, net of a reserve for slow moving and obsolete inventory of $373,000 and $317,484 at September 30, 2013 and December 31, 2012, respectively. |
Note_4_Plant_Property_Equipmen
Note 4. Plant, Property & Equipment, net (Notes) | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Plant, Property & Equipment, net [Abstract] | ' | ||||||||||||
Property, Plant & Equipment, net | ' | ||||||||||||
Property, Plant and Equipment, net | |||||||||||||
Property, plant and equipment consist of the following: | |||||||||||||
Asset lives (in years) | September 30, 2013 | December 31, 2012 | |||||||||||
Machinery and equipment | 3 | to | 15 | $ | 13,492,740 | $ | 12,298,011 | ||||||
Building and improvements | 20 | 4,298,556 | 4,293,725 | ||||||||||
Vehicles | 3 | to | 5 | 94,227 | 94,227 | ||||||||
Furniture, fixtures, computers and software | 3 | to | 5 | 1,263,879 | 1,246,807 | ||||||||
Land | 202,492 | 202,492 | |||||||||||
Construction in progress | 264,750 | 103,269 | |||||||||||
Total property, plant and equipment | 19,616,644 | 18,238,531 | |||||||||||
Less: accumulated depreciation | (12,071,369 | ) | (11,080,019 | ) | |||||||||
Property, plant and equipment, net | $ | 7,545,275 | $ | 7,158,512 | |||||||||
For the nine months ended September 30, 2013 and 2012, the Company recorded $1,067,812 and $1,069,967 of depreciation expense, respectively. |
Note_5_Debt
Note 5. Debt | 9 Months Ended |
Sep. 30, 2013 | |
Debt [Abstract] | ' |
Debt | ' |
Debt | |
On March 29, 2013, the Company entered into a multi-year credit facility with a Massachusetts based bank. The credit facility includes a revolver of up to $4.0 million, a commercial term loan of $1.5 million and an equipment line of credit of $1.0 million and is secured by substantially all assets of the Company with the exception of real property. | |
The revolver provides for borrowings up to 80% of eligible accounts receivable and 50% of eligible raw materials inventory. This revolver replaced the previous $3.0 million demand line of credit which was scheduled to expire April 30, 2013. The interest rate on the revolver at September 30, 2013 was 3.50% and the outstanding principal balance was $2,399,493. This revolver has a maturity date of June 30, 2015. | |
The commercial term loan from the bank facility was used to refinance existing equipment notes, operating leases, and to fund other current liabilities of continuing operations. At September 30, 2013, the outstanding amount remaining on the term loan was $1,363,909. The term loan has a five year term with a maturity date of March 29, 2018. The interest rate on the loan is a fixed 4.25% per annum. | |
The equipment line of credit allows for advances on the equipment line that shall not exceed 80% of the invoice amount of the equipment being purchased. The interest rate at September 30, 2013 was 3.50% and the outstanding principal balance was $177,251. The term of the equipment line of credit is six years, maturing on March 29, 2019, inclusive of a one year maximum draw period during which payments are interest only. This equipment line of credit will convert to a five year term loan at the end of the one year draw period, or when the $1.0 million line is fully drawn upon. | |
In January 2013, the Company entered into two equipment notes totaling $272,500 with a financing company to acquire production equipment. The outstanding balance of these equipment notes at September 30, 2013 was $234,646. The term of these equipment notes is five years. | |
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. As a result of the third quarter results, the Company was not in compliance with a financial covenant. On November 19, 2013, the Company received a formal waiver as to the non-compliance. | |
At December 31, 2012, the Company had a master lease agreement with its bank that allowed for money to be drawn on standard terms for the purchase of equipment. The equipment notes under the master lease agreement were paid off in April 2013 using the commercial term loan under bank facility. |
Note_6_Income_Taxes
Note 6. Income Taxes | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Income Taxes [Abstract] | ' | |||||||||||||
Income Taxes | ' | |||||||||||||
Income Taxes | ||||||||||||||
The following table sets forth certain information regarding the Company's income tax (benefits) provision: | ||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||
2013 | 2012 Revised | 2013 | 2012 Revised | |||||||||||
Income tax (benefit) provision from continuing operations | $ | — | $ | (296,133 | ) | $ | 2,267,969 | $ | (609,623 | ) | ||||
The tax provision for the nine months ended September 30, 2013 and the tax benefit for the nine months ended September 30, 2012 are attributable to the U.S. Federal, state and foreign income taxes on our continuing operations. The tax provision for the nine months ended September 30, 2013 includes the impact on tax expense of $2,267,969 associated with the establishment of a full valuation allowance of the Company’s deferred tax assets (see Note 2). | ||||||||||||||
The Company files income tax returns in the U.S. Federal and various state and foreign jurisdictions and the periods from 2009 to 2012 remain open to examination by the taxing authorities in the various jurisdictions. The Company believes it is not subject to any significant tax risks related to uncertain tax positions. Accordingly, the Company has not accrued interest or penalties associated with unrecognized tax benefits. | ||||||||||||||
The Company recorded no income tax provision or benefit for the three months ended September 30, 2013, due to the establishment of a full valuation allowance of the Company's deferred tax assets in the second quarter (see Note 2), as compared to a tax benefit of $296,133 for the three months ended September 30, 2012. | ||||||||||||||
The Company recorded no income tax provision or benefit for discontinued operations for the three or nine months ended September 30, 2013, as compared to income tax benefits of $1,190,580 and $1,731,580, respectively for the three and nine months ended September 30, 2012, which is reflected in the net loss from discontinued operations, net of tax, in the Company's consolidated statements of operations. |
Note_7_Commitments_and_Conting
Note 7. Commitments and Contingencies (Notes) | 9 Months Ended |
Sep. 30, 2013 | |
Commitments and Contingencies [Abstract] | ' |
Commitments and Contingencies | ' |
Commitments and Contingencies | |
Legal Matters | |
From time to time, the Company is subject to legal proceedings, threats of legal action and claims which arise in the ordinary course of our business. With respect to three specific matters, aggregate claims have been asserted of approximately $700,000. Management believes the maximum reasonably possible loss related to these matters is substantially less than the amounts asserted. Management, with its external legal counsel, intends to vigorously defend these matters and management believes that it has meritorious defenses in all such matters. Accordingly, no accrual has been recorded for these matters as of September 30, 2013. Management believes that the ultimate resolution of these matters, including likely recoveries from insurance carriers if unfavorable outcomes occur, will not have a material adverse effect on our results of operations or financial condition. | |
Operating Leases | |
The Company leases certain equipment under non-cancelable lease arrangements ranging from three to five years. Lease expense under all operating leases was approximately $0 and $52,854 for the three months ended September 30, 2013 and 2012, respectively and $50,781 and $158,562 for the nine months ended September 30, 2013 and 2012, respectively. |
Note_8_ShareBased_Compensation
Note 8. Share-Based Compensation | 9 Months Ended | |||||||||
Sep. 30, 2013 | ||||||||||
Share-based Compensation [Abstract] | ' | |||||||||
Share-Based Compensation | ' | |||||||||
Share-Based Compensation | ||||||||||
The Company recognized share-based compensation expense of $12,900 and $20,148 for the three months ended September 30, 2013 and 2012, respectively and $40,646 and $84,650 for the nine months ended September 30, 2013 and 2012, respectively. | ||||||||||
The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model. Key assumptions used to estimate the fair value of the stock options include the exercise price of the award, the expected option term, the expected volatility of the Company’s stock over the option’s expected term, the risk free interest rate over the option’s expected term, and the Company’s expected annual dividend yield. The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the Company’s stock options for the three and nine months ended September 30, 2013 and 2012. Estimates of fair values are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards. | ||||||||||
The option life was determined using the historical data to determine an expected option life. Prior to 2013 the simplified method was used. During the three months ended September 30, 2013, no new grants were issued. During the nine months ended September 30, 2013, a total of 15,000 new grants were issued. No new grants were issued during the three and nine months ended September 30, 2012. | ||||||||||
Share-based incentive plan | ||||||||||
At September 30, 2013, the Company had one stock option plan that provides for both incentive and non-qualified stock options to be granted to certain eligible employees, non-employee directors, or consultants. On March 10, 2010, the Company's Board of Directors adopted the Arrhythmia Research Technology, Inc. 2010 Equity Incentive Plan (the “2010 Plan”) upon the recommendation of the Compensation Committee. The 2010 Plan authorizes the issuance of an aggregate of 500,000 shares, namely, 400,000 shares of our common stock plus an aggregate of 100,000 shares previously reserved for issuance under the Company's 2005 Stock Award Plan (the “2005 Plan”). The 2010 Plan replaced in its entirety the 2005 Plan, under which no grants have been made. The Company's 2001 Stock Option Plan (the "2001 Plan"), which expired in 2011, will continue to govern outstanding options but no further options will be granted under the 2001 Plan. The options granted have either six or ten year contractual terms and either vest immediately or vest annually over a five-year term. | ||||||||||
At September 30, 2013, there were 375,000 shares available for future grants under the 2010 Plan. | ||||||||||
The following table sets forth the stock option transactions for the nine months ended September 30, 2013: | ||||||||||
Number of shares | Weighted average exercise price | Weighted average remaining contractual term (years) | Aggregate intrinsic value | |||||||
Outstanding at December 31, 2012 | 285,000 | $ | 2.44 | 4.8 | $ | — | ||||
Exercisable at December 31, 2012 | 138,900 | 2.53 | 3.1 | — | ||||||
Granted | 15,000 | 2.58 | 9.75 | — | ||||||
Exercised | — | — | — | — | ||||||
Forfeited/expired | (73,500 | ) | — | — | ||||||
Outstanding at September 30, 2013 | 226,500 | 6.16 | 4.62 | 1,800 | ||||||
Exercisable at September 30, 2013 | 142,500 | $ | 6.39 | 3.28 | $ | — | ||||
During the nine months ended September 30, 2013, 15,000 new options were granted as compared to zero new options for the same period in 2012. At September 30, 2013 and 2012, the intrinsic value of the exercisable options is $1,800 and $0, respectively. | ||||||||||
The following table sets forth the status of the Company’s non-vested options for the nine months ended September 30, 2013: | ||||||||||
Number of shares | Weighted average fair value | |||||||||
Non-vested at December 31, 2012 | 146,100 | $ | 1.22 | |||||||
Granted | 15,000 | 0.82 | ||||||||
Vested | (48,300 | ) | 1.5 | |||||||
Forfeited/expired | (28,800 | ) | 1.28 | |||||||
Non-vested at September 30, 2013 | 84,000 | $ | 0.97 | |||||||
At September 30, 2013, there was $84,761 of total unrecognized cost related to non-vested share-based compensation arrangements granted under the Plan. This cost is expected to be recognized over a weighted average period of 2.83 years. |
Note_9_Discontinued_Operations
Note 9. Discontinued Operations | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Discontinued Operations [Abstract] | ' | |||||||
Discontinued Operations | ' | |||||||
Discontinued Operations | ||||||||
In the third quarter of 2012 the Company discontinued the operations of its WirelessDx subsidiaries. | ||||||||
Net revenues from discontinued operations for the three months ended September 30, 2013 and 2012 were $0 and $132,137, respectively. Net income from discontinued operations for the three months ended September 30, 2013 was $3,977 as compared to a net loss from discontinued operations of $1,996,055 for the same period in 2012, respectively, presented net of tax of $0 and a tax benefit of $1,190,580, respectively. | ||||||||
Net revenues from discontinued operations for the nine months ended September 30, 2013 and 2012 were $0 and $372,955, respectively. Loss from discontinued operations for the nine months ended September 30, 2013 and 2012 were $16,569 and $3,523,380, respectively, presented net of tax of $0 and a tax benefit of $1,731,580, respectively. | ||||||||
At September 30, 2013 and December 31, 2012, the Company has a $1.0 million liability for an unmet performance obligation related to the discontinued operations. This performance obligation was secured by a $1.0 million letter of credit at December 31, 2012. In April 2013, as part of a new bank facility, this letter of credit was replaced with $1.0 million in restricted cash. At both September 30, 2013 and December 31, 2012, the performance guarantee liability was carried on the balance sheet of continuing operations, as the liability is guaranteed by ART. The outcome of this liability will be determined on or before May 31, 2014. | ||||||||
The assets and liabilities of the discontinued operations are presented in the unaudited September 30, 2013 and audited December 31, 2012 condensed consolidated balance sheet excluding intercompany loans which exceed net book value listed below: | ||||||||
30-Sep-13 | 31-Dec-12 | |||||||
Cash | $ | 4,285 | $ | 30,882 | ||||
Prepaid expenses and other assets | — | 3,419 | ||||||
Total current assets from discontinued operations | 4,285 | 34,301 | ||||||
Property and equipment, net of impairment and accumulated depreciation of $119,050 and $1,434,937, respectively | — | 284,300 | ||||||
Deferred taxes, non-current | — | — | ||||||
Total non-current assets from discontinued operations | — | 284,300 | ||||||
Total assets from discontinued operations | $ | 4,285 | $ | 318,601 | ||||
Accounts payable | $ | 319,937 | $ | 477,324 | ||||
Accrued expenses | — | 123,247 | ||||||
Total current liabilities from discontinued operations | 319,937 | 600,571 | ||||||
Total liabilities from discontinued operations | $ | 319,937 | $ | 600,571 | ||||
Note_10_Reclassification_of_pr
Note 10. Reclassification of prior periods (Notes) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Reclassification of prior periods [Abstract] | ' | |||||||||||||||||||
Reclassification of prior periods | ' | |||||||||||||||||||
Revisions and Reclassification of Prior Period Balances | ||||||||||||||||||||
Certain revisions and reclassifications have been made to prior period amounts to conform to the current year presentation, primarily related to deferred revenue. In 2012, the Company revised prior period balances to correct errors in the revenue recognition of certain tooling transactions. | ||||||||||||||||||||
Revision of prior period financial statements | ||||||||||||||||||||
In 2012, the Company identified prior period errors relating to revenue recognition for certain tooling transactions that qualify for treatment as multiple-element arrangements. The Company concluded that these errors were not material individually or in the aggregate to any of the prior reporting periods, and therefore, amendments of previously filed reports were not required, as more fully described in the Company's Annual Report on Form 10-K for the year ended December 31, 2012. As such, the revisions for these corrections to the applicable prior periods are reflected in the financial information included herein and have been provided in summarized format below. | ||||||||||||||||||||
The impact of the errors on the Company's balance sheet as of September 30, 2012 is summarized below: | ||||||||||||||||||||
30-Sep-12 | As originally reported | Correction of error adjustment | As revised | |||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Deferred income taxes | $ | — | $ | 59,493 | $ | 59,493 | ||||||||||||||
Deposits, prepaid expenses and other current assets | 745,531 | 222,019 | 967,550 | |||||||||||||||||
Total current assets | 7,962,690 | 281,512 | 8,244,202 | |||||||||||||||||
Other non-current assets | — | 218,299 | 218,299 | |||||||||||||||||
Total assets | 17,632,493 | 499,811 | 18,132,304 | |||||||||||||||||
Liabilities and Shareholders’ Equity | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Deferred revenue | — | 281,746 | 281,746 | |||||||||||||||||
Total current liabilities | 5,595,292 | 281,746 | 5,877,038 | |||||||||||||||||
Long-term liabilities: | ||||||||||||||||||||
Long-term deferred revenue | — | 309,377 | 309,377 | |||||||||||||||||
Total Long-term liabilities | 1,068,992 | 309,377 | 1,378,369 | |||||||||||||||||
Total liabilities | 6,664,284 | 591,123 | 7,255,407 | |||||||||||||||||
Shareholders’ equity: | ||||||||||||||||||||
Retained earnings | 3,139,296 | (91,312 | ) | 3,047,984 | ||||||||||||||||
Total shareholders’ equity | 10,968,209 | (91,312 | ) | 10,876,897 | ||||||||||||||||
Total liabilities and shareholders’ equity | 17,632,493 | 499,811 | 18,132,304 | |||||||||||||||||
The impact of the errors on the Company's statements of operations for the three and nine months ended September 30, 2012 is summarized below: | ||||||||||||||||||||
Three months ended September 30, 2012 | Nine months ended September 30, 2012 | |||||||||||||||||||
As originally reported | Correction of error adjustment | As revised | As originally reported | Correction of error adjustment | As revised | |||||||||||||||
Net revenues | $ | 4,839,812 | $ | 119,222 | $ | 4,959,034 | $ | 15,881,161 | $ | (296,004 | ) | $ | 15,585,157 | |||||||
Cost of sales | 4,112,599 | 85,338 | 4,197,937 | 13,106,456 | (221,930 | ) | 12,884,526 | |||||||||||||
Gross profit | 727,213 | 33,884 | 761,097 | 2,774,705 | (74,074 | ) | 2,700,631 | |||||||||||||
Loss from operations | (1,774,241 | ) | 33,884 | (1,740,357 | ) | (1,918,649 | ) | (74,074 | ) | (1,992,723 | ) | |||||||||
Loss before taxes | (1,782,569 | ) | 33,884 | (1,748,685 | ) | (1,941,780 | ) | (74,074 | ) | (2,015,854 | ) | |||||||||
Income tax benefit | (309,500 | ) | 13,367 | (296,133 | ) | (580,400 | ) | (29,223 | ) | (609,623 | ) | |||||||||
Loss before discontinued operations | (1,473,069 | ) | 20,517 | (1,452,552 | ) | (1,361,380 | ) | (44,851 | ) | (1,406,231 | ) | |||||||||
Net loss | (3,469,124 | ) | 20,517 | (3,448,607 | ) | (4,884,758 | ) | (44,851 | ) | (4,929,611 | ) | |||||||||
Loss per share - basic and diluted | (1.24 | ) | 0.01 | (1.24 | ) | (1.75 | ) | (0.02 | ) | (1.76 | ) | |||||||||
Weighted average shares outstanding, basic and diluted | 2,790,514 | 2,790,514 | 2,790,514 | 2,790,514 | 2,790,514 | 2,790,514 | ||||||||||||||
The impact of the errors on the Company's statement of cash flows for nine months ended September 30, 2012 is summarized below: | ||||||||||||||||||||
Nine months ended September 30, 2012 | ||||||||||||||||||||
As originally reported | Correction of error adjustment | As revised | ||||||||||||||||||
Net loss | $ | (4,884,758 | ) | $ | (44,853 | ) | $ | (4,929,611 | ) | |||||||||||
Deferred income taxes | (575,900 | ) | (29,223 | ) | (605,123 | ) | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||
Deposits, prepaid expenses and other assets | (254,598 | ) | (221,930 | ) | (476,528 | ) | ||||||||||||||
Accrued expenses and other liabilities | (119,498 | ) | 296,004 | 176,506 | ||||||||||||||||
Net cash used in operating activities | (1,498,361 | ) | — | (1,498,361 | ) | |||||||||||||||
Note_11_Subsequent_Events_Note
Note 11. Subsequent Events (Notes) | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
Subsequent Events | |
As a result of the third quarter results, the Company was not in compliance with a financial covenant. On November 19, 2013, the Company received a formal waiver as to the non-compliance (see Note 5). | |
There were no other subsequent events or transactions that require adjustment to or disclosure in these financial statements. |
Note_2_Accounting_Policies_Pol
Note 2. Accounting Policies (Policies) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||||||
Principles of Consolidation | ' | ||||||||||||||||||||
Principles of Consolidation | |||||||||||||||||||||
The consolidated financial statements include the accounts of ART and its wholly owned subsidiary, Micron Products, Inc. ("Micron"). The Company's Pennsylvania subsidiary, RMDDxUSA Corp., and its Prince Edward Island subsidiary, RMDDx Corporation, collectively "WirelessDx", discontinued operations in the third quarter of 2012 and are presented herein as discontinued operations. All intercompany balances and transactions have been eliminated in consolidation. | |||||||||||||||||||||
Revenue Recognition | ' | ||||||||||||||||||||
Revenue Recognition | |||||||||||||||||||||
Revenue is recorded when all criteria for revenue recognition have been satisfied, which is generally when goods are shipped to the Company's customers. Product revenue is recognized in the period when persuasive evidence of an arrangement with a customer exists, the products are shipped and title has transferred to the customer, the price is fixed or determined and collection is probable. | |||||||||||||||||||||
The Company enters into arrangements containing multiple elements which may include a combination of the sale of molds, tooling, engineering and validation services and production units. The Company has determined that the sale of certain molds, tooling, engineering and validation services, and the production units, represent one unit of accounting, based on an assessment of the respective standalone value, as defined in ASC 605-25, “Revenue Recognition: Multiple - Element Arrangements.” | |||||||||||||||||||||
The Company determines the estimated product life-cycle, based upon historical knowledge of the customer, over which the deferred revenue will be amortized into revenue, which is generally three years. The Company carries prepaid tooling costs associated with the related arrangement as other assets on the Company's balance sheet. These costs are amortized to expense at the same time as the deferred revenue is amortized into revenue. | |||||||||||||||||||||
The Company cannot effectively predict short-term or long-term production volume in a consistent and meaningful manner due to the nature of these molds, associated products and customer ordering patterns. Therefore, the Company is unable to account for the transactions under the Units of Production method and management has determined the most appropriate amortization method to be the straight-line method. | |||||||||||||||||||||
The Company also recognizes revenue in accordance with ASC 985-605 "Software - Revenue Recognition" for software licenses it sells. Revenue is recognized when licenses are sold as the revenue cycle is completed with no warranty, returns or technical support to customers. Total revenue from software sales was immaterial in relation to consolidated revenues. | |||||||||||||||||||||
Fair value of financial instruments | ' | ||||||||||||||||||||
Fair value of financial instruments | |||||||||||||||||||||
The carrying amount reported in the balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the immediate or short-term nature of such instruments. The carrying value of debt approximates fair value since it provides for market terms and interest rates. | |||||||||||||||||||||
Concentration of credit risk | ' | ||||||||||||||||||||
Concentration of credit risk | |||||||||||||||||||||
Financial instruments, which potentially expose the Company to concentrations of credit risk, consist primarily of trade accounts receivable and cash. | |||||||||||||||||||||
Accounts receivable are customer obligations due under normal trade terms. A large portion of the Company's products are sold to large diversified medical and defense product manufacturers. The Company does not generally require collateral for its sales; however, the Company believes that its terms of sale provide adequate protection against significant credit risk. Currently, the Company generally does not receive purchase volume commitments extending beyond several months. Large corporations can shift focus away from a need for the Company’s products and services with little or no warning. The loss of any one or more of these customers may have an immediate significant adverse effect on our financial results. | |||||||||||||||||||||
It is the Company’s policy to place its cash in high quality financial institutions. The Company does not believe significant credit risk exists above federally insured limits with respect to these institutions. | |||||||||||||||||||||
Cash and cash equivalents | ' | ||||||||||||||||||||
Cash and cash equivalents | |||||||||||||||||||||
Cash and cash equivalents consist of cash on hand and on deposit in high quality financial institutions with maturities of three months or less at the time of purchase. | |||||||||||||||||||||
Restricted cash | ' | ||||||||||||||||||||
Restricted cash | |||||||||||||||||||||
Restricted cash consists of cash on deposit at the Bank of Nova Scotia in lieu of a letter of credit associated with a performance guarantee liability (Note 9). | |||||||||||||||||||||
Allowance for doubtful accounts | ' | ||||||||||||||||||||
Allowance for doubtful accounts | |||||||||||||||||||||
Management regularly reviews accounts receivable to determine if any receivables will potentially be uncollectible. The Company includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve, in the Company's overall allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Based on the information available to the Company, management believes the allowance for doubtful accounts of $40,000 and $117,098 as of September 30, 2013 and December 31, 2012, respectively, are adequate. | |||||||||||||||||||||
Inventories | ' | ||||||||||||||||||||
Inventories | |||||||||||||||||||||
The Company values its inventory at the lower of average cost, first-in-first-out (FIFO) or net realizable value. The Company reviews its inventory for quantities in excess of production requirements, obsolescence and for compliance with internal quality specifications. Any adjustments to inventory would be equal to the difference between the cost of inventory and the estimated net market value based upon assumptions about future demand, market conditions and expected cost to distribute those products to market. The Company records adjustments to account for potential scrap during normal manufacturing operations or potential obsolescence for slow moving inventory. | |||||||||||||||||||||
Property, plant and equipment | ' | ||||||||||||||||||||
Property, plant and equipment | |||||||||||||||||||||
Property, plant and equipment are recorded at cost and include expenditures which substantially extend their useful lives. Depreciation on property, plant and equipment is calculated using the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and repairs are charged to earnings as incurred. When equipment is retired or sold, the resulting gain or loss is reflected in earnings. | |||||||||||||||||||||
Long-lived and intangible assets | ' | ||||||||||||||||||||
Long-lived and intangible assets | |||||||||||||||||||||
The Company assesses the impairment of long-lived assets and intangible assets with finite lives whenever events or changes in circumstances indicate that the carrying value may not be fully recoverable. Intangible assets consist of the following: | |||||||||||||||||||||
September 30, 2013 | December 31, 2012 | ||||||||||||||||||||
Estimated Useful Life (in years) | Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | |||||||||||||||
Patents and Trademarks | 13 | $ | 443,201 | $ | (420,936 | ) | $ | 22,265 | $ | 480,750 | $ | (456,361 | ) | $ | 24,389 | ||||||
Patents and Trademarks* | — | 141,923 | — | 141,923 | 110,702 | — | 110,702 | ||||||||||||||
Trade names | 8 | 33,250 | (13,971 | ) | 19,279 | 33,250 | (12,250 | ) | 21,000 | ||||||||||||
Total Intangible assets: | $ | 618,374 | $ | (434,907 | ) | $ | 183,467 | $ | 624,702 | $ | (468,611 | ) | $ | 156,091 | |||||||
* Patents and Trademarks not yet in service. | |||||||||||||||||||||
Income taxes | ' | ||||||||||||||||||||
Income taxes | |||||||||||||||||||||
The Company accounts for income taxes in accordance with ASC 740 “Income Taxes,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using tax rates in effect for the year in which the differences are expected to reverse. | |||||||||||||||||||||
As of June 30, 2013, the Company had recorded twelve consecutive quarters of pre-tax losses. Additionally, management’s projections of future income in the face of challenging market conditions, and the impact of identified tax planning strategies, creates uncertainty regarding the Company's ability to realize its deferred tax assets pursuant to the “more-likely-than-not” standard, as defined in ASC 740-10-30-5. Accordingly, in the second quarter the Company recorded tax expense of $2,267,969 to establish a full valuation allowance on its deferred tax assets. | |||||||||||||||||||||
Management evaluated and weighted all available evidence, both positive and negative, through June 30, 2013, and determined that the weight of negative evidence occurring in the second quarter made it difficult to form a supportable conclusion that a valuation allowance was not needed. Factors such as projected increases in cost of sales, overall sales volumes from key customers and the continued volatility in the silver market negatively impacted the second quarter re-forecast of pre-tax earnings and the analysis of future taxable income. Consequently, management determined that the Company could not support the realization of its deferred tax assets, at a more-likely-than-not standard, and identified the second quarter of 2013 as the appropriate period to record a full valuation allowance, on its deferred tax assets of $2,267,969. Management determined that no change was necessary for the three months ended September 30, 2013. | |||||||||||||||||||||
Share-based compensation | ' | ||||||||||||||||||||
Share-based compensation | |||||||||||||||||||||
Share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant). | |||||||||||||||||||||
Comprehensive income | ' | ||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||
The Company has accumulated comprehensive income of $42,502 from changes in currency valuations with our discontinued Canadian operations as of September 30, 2013 and December 31, 2012. There were no changes in comprehensive income in the three or nine months ended September 30, 2013. | |||||||||||||||||||||
(Loss) earnings per share data | ' | ||||||||||||||||||||
(Loss) earnings per share data | |||||||||||||||||||||
Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding. The computation of diluted earnings per share is similar to the computation of basic earnings per share except that the denominator is increased to include the average number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. In addition, the numerator is adjusted for any changes in income that would result from the assumed conversions of those potential shares. As of September 30, 2013 and December 31, 2012 there were 226,500 and 285,000 options outstanding, respectively, that were anti-dilutive and were not included in the calculation of earnings or loss per share. | |||||||||||||||||||||
Basic and diluted EPS computations are as follows: | |||||||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||
2013 | 2012 Revised | 2013 | 2012 Revised | ||||||||||||||||||
Net loss available to common shareholders | $ | (565,551 | ) | $ | (3,448,607 | ) | $ | (3,461,413 | ) | $ | (4,929,611 | ) | |||||||||
Weighted average common shares outstanding | 2,704,239 | 2,790,514 | 2,704,239 | 2,790,514 | |||||||||||||||||
Loss per share - basic and diluted | |||||||||||||||||||||
Continuing operations | (0.21 | ) | (0.52 | ) | (1.27 | ) | (0.50 | ) | |||||||||||||
Discontinued operations | — | (0.72 | ) | (0.01 | ) | (1.26 | ) | ||||||||||||||
Loss per share - basic and diluted | $ | (0.21 | ) | $ | (1.24 | ) | $ | (1.28 | ) | $ | (1.76 | ) | |||||||||
Segments | ' | ||||||||||||||||||||
Segments | |||||||||||||||||||||
In 2012, the Company determined that the Company's results will be reported as one segment due to the discontinued operations of its WirelessDx segment and since the results of its previously reported ART segment were not quantitatively material and were not regularly reviewed by the Chief Operating and Decision Maker ("CODM"). | |||||||||||||||||||||
Research and development | ' | ||||||||||||||||||||
Research and development | |||||||||||||||||||||
Research and development expenses include costs directly attributable to the conduct of research and development programs primarily related to the development of our software products and improving the efficiency and capabilities of our manufacturing processes. Such costs include salaries, payroll taxes, employee benefit costs, materials, supplies, depreciation on research equipment, and services provided by outside contractors. All costs associated with research and development programs are expensed as incurred. | |||||||||||||||||||||
Reclassification | ' | ||||||||||||||||||||
Reclassifications | |||||||||||||||||||||
Certain reclassifications have been made to prior period amounts to conform to the current period presentation. In 2012, the Company revised prior period balances to correct errors in the revenue recognition of certain Tooling transactions (Note 10). |
Note_2_Accounting_Policies_Tab
Note 2. Accounting Policies (Tables) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||
Intangible Assets [Abstract] | ' | ||||||||||||||||||||
Intangible Assets | ' | ||||||||||||||||||||
Intangible assets consist of the following: | |||||||||||||||||||||
September 30, 2013 | December 31, 2012 | ||||||||||||||||||||
Estimated Useful Life (in years) | Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | |||||||||||||||
Patents and Trademarks | 13 | $ | 443,201 | $ | (420,936 | ) | $ | 22,265 | $ | 480,750 | $ | (456,361 | ) | $ | 24,389 | ||||||
Patents and Trademarks* | — | 141,923 | — | 141,923 | 110,702 | — | 110,702 | ||||||||||||||
Trade names | 8 | 33,250 | (13,971 | ) | 19,279 | 33,250 | (12,250 | ) | 21,000 | ||||||||||||
Total Intangible assets: | $ | 618,374 | $ | (434,907 | ) | $ | 183,467 | $ | 624,702 | $ | (468,611 | ) | $ | 156,091 | |||||||
* Patents and Trademarks not yet in service. | |||||||||||||||||||||
Basic and diluted EPS | ' | ||||||||||||||||||||
Basic and diluted EPS computations are as follows: | |||||||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||
2013 | 2012 Revised | 2013 | 2012 Revised | ||||||||||||||||||
Net loss available to common shareholders | $ | (565,551 | ) | $ | (3,448,607 | ) | $ | (3,461,413 | ) | $ | (4,929,611 | ) | |||||||||
Weighted average common shares outstanding | 2,704,239 | 2,790,514 | 2,704,239 | 2,790,514 | |||||||||||||||||
Loss per share - basic and diluted | |||||||||||||||||||||
Continuing operations | (0.21 | ) | (0.52 | ) | (1.27 | ) | (0.50 | ) | |||||||||||||
Discontinued operations | — | (0.72 | ) | (0.01 | ) | (1.26 | ) | ||||||||||||||
Loss per share - basic and diluted | $ | (0.21 | ) | $ | (1.24 | ) | $ | (1.28 | ) | $ | (1.76 | ) |
Note_3_Inventories_Tables
Note 3. Inventories (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Inventories [Abstract] | ' | |||||||
Inventories | ' | |||||||
Inventories consist of the following: | ||||||||
September 30, | December 31, 2012 | |||||||
2013 | ||||||||
Raw materials | $ | 1,062,042 | $ | 521,908 | ||||
Work-in-process | 302,891 | 248,159 | ||||||
Finished goods | 1,289,078 | 1,645,037 | ||||||
Total | $ | 2,654,011 | $ | 2,415,104 | ||||
Note_4_Plant_Property_Equipmen1
Note 4. Plant, Property & Equipment, net (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||||||
Property, Plant & Equipment, net | ' | ||||||||||||
Property, plant and equipment consist of the following: | |||||||||||||
Asset lives (in years) | September 30, 2013 | December 31, 2012 | |||||||||||
Machinery and equipment | 3 | to | 15 | $ | 13,492,740 | $ | 12,298,011 | ||||||
Building and improvements | 20 | 4,298,556 | 4,293,725 | ||||||||||
Vehicles | 3 | to | 5 | 94,227 | 94,227 | ||||||||
Furniture, fixtures, computers and software | 3 | to | 5 | 1,263,879 | 1,246,807 | ||||||||
Land | 202,492 | 202,492 | |||||||||||
Construction in progress | 264,750 | 103,269 | |||||||||||
Total property, plant and equipment | 19,616,644 | 18,238,531 | |||||||||||
Less: accumulated depreciation | (12,071,369 | ) | (11,080,019 | ) | |||||||||
Property, plant and equipment, net | $ | 7,545,275 | $ | 7,158,512 | |||||||||
Note_6_Income_Taxes_Tables
Note 6. Income Taxes (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
Income Taxes [Abstract] | ' | |||||||||||||
Income Taxes | ' | |||||||||||||
The following table sets forth certain information regarding the Company's income tax (benefits) provision: | ||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||
2013 | 2012 Revised | 2013 | 2012 Revised | |||||||||||
Income tax (benefit) provision from continuing operations | $ | — | $ | (296,133 | ) | $ | 2,267,969 | $ | (609,623 | ) | ||||
Note_8_ShareBased_Compensation1
Note 8. Share-Based Compensation (Tables) | 9 Months Ended | |||||||||
Sep. 30, 2013 | ||||||||||
Share-based Compensation [Abstract] | ' | |||||||||
Stock Option Transactions | ' | |||||||||
The following table sets forth the stock option transactions for the nine months ended September 30, 2013: | ||||||||||
Number of shares | Weighted average exercise price | Weighted average remaining contractual term (years) | Aggregate intrinsic value | |||||||
Outstanding at December 31, 2012 | 285,000 | $ | 2.44 | 4.8 | $ | — | ||||
Exercisable at December 31, 2012 | 138,900 | 2.53 | 3.1 | — | ||||||
Granted | 15,000 | 2.58 | 9.75 | — | ||||||
Exercised | — | — | — | — | ||||||
Forfeited/expired | (73,500 | ) | — | — | ||||||
Outstanding at September 30, 2013 | 226,500 | 6.16 | 4.62 | 1,800 | ||||||
Exercisable at September 30, 2013 | 142,500 | $ | 6.39 | 3.28 | $ | — | ||||
Non Vested Stock Options | ' | |||||||||
The following table sets forth the status of the Company’s non-vested options for the nine months ended September 30, 2013: | ||||||||||
Number of shares | Weighted average fair value | |||||||||
Non-vested at December 31, 2012 | 146,100 | $ | 1.22 | |||||||
Granted | 15,000 | 0.82 | ||||||||
Vested | (48,300 | ) | 1.5 | |||||||
Forfeited/expired | (28,800 | ) | 1.28 | |||||||
Non-vested at September 30, 2013 | 84,000 | $ | 0.97 | |||||||
Note_9_Discontinued_Operations1
Note 9. Discontinued Operations (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Discontinued Operations [Abstract] | ' | |||||||
Discontinued Operations | ' | |||||||
The assets and liabilities of the discontinued operations are presented in the unaudited September 30, 2013 and audited December 31, 2012 condensed consolidated balance sheet excluding intercompany loans which exceed net book value listed below: | ||||||||
30-Sep-13 | 31-Dec-12 | |||||||
Cash | $ | 4,285 | $ | 30,882 | ||||
Prepaid expenses and other assets | — | 3,419 | ||||||
Total current assets from discontinued operations | 4,285 | 34,301 | ||||||
Property and equipment, net of impairment and accumulated depreciation of $119,050 and $1,434,937, respectively | — | 284,300 | ||||||
Deferred taxes, non-current | — | — | ||||||
Total non-current assets from discontinued operations | — | 284,300 | ||||||
Total assets from discontinued operations | $ | 4,285 | $ | 318,601 | ||||
Accounts payable | $ | 319,937 | $ | 477,324 | ||||
Accrued expenses | — | 123,247 | ||||||
Total current liabilities from discontinued operations | 319,937 | 600,571 | ||||||
Total liabilities from discontinued operations | $ | 319,937 | $ | 600,571 | ||||
Note_10_Reclassification_of_pr1
Note 10. Reclassification of prior periods (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
Reclassification of prior periods [Abstract] | ' | |||||||||||||||||||
Reclassification of prior periods, balance sheet | ' | |||||||||||||||||||
The impact of the errors on the Company's balance sheet as of September 30, 2012 is summarized below: | ||||||||||||||||||||
30-Sep-12 | As originally reported | Correction of error adjustment | As revised | |||||||||||||||||
Assets | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Deferred income taxes | $ | — | $ | 59,493 | $ | 59,493 | ||||||||||||||
Deposits, prepaid expenses and other current assets | 745,531 | 222,019 | 967,550 | |||||||||||||||||
Total current assets | 7,962,690 | 281,512 | 8,244,202 | |||||||||||||||||
Other non-current assets | — | 218,299 | 218,299 | |||||||||||||||||
Total assets | 17,632,493 | 499,811 | 18,132,304 | |||||||||||||||||
Liabilities and Shareholders’ Equity | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Deferred revenue | — | 281,746 | 281,746 | |||||||||||||||||
Total current liabilities | 5,595,292 | 281,746 | 5,877,038 | |||||||||||||||||
Long-term liabilities: | ||||||||||||||||||||
Long-term deferred revenue | — | 309,377 | 309,377 | |||||||||||||||||
Total Long-term liabilities | 1,068,992 | 309,377 | 1,378,369 | |||||||||||||||||
Total liabilities | 6,664,284 | 591,123 | 7,255,407 | |||||||||||||||||
Shareholders’ equity: | ||||||||||||||||||||
Retained earnings | 3,139,296 | (91,312 | ) | 3,047,984 | ||||||||||||||||
Total shareholders’ equity | 10,968,209 | (91,312 | ) | 10,876,897 | ||||||||||||||||
Total liabilities and shareholders’ equity | 17,632,493 | 499,811 | 18,132,304 | |||||||||||||||||
Reclassification of prior periods, statement of operations | ' | |||||||||||||||||||
The impact of the errors on the Company's statements of operations for the three and nine months ended September 30, 2012 is summarized below: | ||||||||||||||||||||
Three months ended September 30, 2012 | Nine months ended September 30, 2012 | |||||||||||||||||||
As originally reported | Correction of error adjustment | As revised | As originally reported | Correction of error adjustment | As revised | |||||||||||||||
Net revenues | $ | 4,839,812 | $ | 119,222 | $ | 4,959,034 | $ | 15,881,161 | $ | (296,004 | ) | $ | 15,585,157 | |||||||
Cost of sales | 4,112,599 | 85,338 | 4,197,937 | 13,106,456 | (221,930 | ) | 12,884,526 | |||||||||||||
Gross profit | 727,213 | 33,884 | 761,097 | 2,774,705 | (74,074 | ) | 2,700,631 | |||||||||||||
Loss from operations | (1,774,241 | ) | 33,884 | (1,740,357 | ) | (1,918,649 | ) | (74,074 | ) | (1,992,723 | ) | |||||||||
Loss before taxes | (1,782,569 | ) | 33,884 | (1,748,685 | ) | (1,941,780 | ) | (74,074 | ) | (2,015,854 | ) | |||||||||
Income tax benefit | (309,500 | ) | 13,367 | (296,133 | ) | (580,400 | ) | (29,223 | ) | (609,623 | ) | |||||||||
Loss before discontinued operations | (1,473,069 | ) | 20,517 | (1,452,552 | ) | (1,361,380 | ) | (44,851 | ) | (1,406,231 | ) | |||||||||
Net loss | (3,469,124 | ) | 20,517 | (3,448,607 | ) | (4,884,758 | ) | (44,851 | ) | (4,929,611 | ) | |||||||||
Loss per share - basic and diluted | (1.24 | ) | 0.01 | (1.24 | ) | (1.75 | ) | (0.02 | ) | (1.76 | ) | |||||||||
Weighted average shares outstanding, basic and diluted | 2,790,514 | 2,790,514 | 2,790,514 | 2,790,514 | 2,790,514 | 2,790,514 | ||||||||||||||
Reclassification of prior periods, statement of cash fows | ' | |||||||||||||||||||
The impact of the errors on the Company's statement of cash flows for nine months ended September 30, 2012 is summarized below: | ||||||||||||||||||||
Nine months ended September 30, 2012 | ||||||||||||||||||||
As originally reported | Correction of error adjustment | As revised | ||||||||||||||||||
Net loss | $ | (4,884,758 | ) | $ | (44,853 | ) | $ | (4,929,611 | ) | |||||||||||
Deferred income taxes | (575,900 | ) | (29,223 | ) | (605,123 | ) | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||
Deposits, prepaid expenses and other assets | (254,598 | ) | (221,930 | ) | (476,528 | ) | ||||||||||||||
Accrued expenses and other liabilities | (119,498 | ) | 296,004 | 176,506 | ||||||||||||||||
Net cash used in operating activities | (1,498,361 | ) | — | (1,498,361 | ) | |||||||||||||||
Note_1_Basis_of_Presentation_D
Note 1. Basis of Presentation (Details) (USD $) | Mar. 29, 2013 |
Revolving line of credit | $4,000,000 |
Commercial term loan | 1,500,000 |
Equipment line of credit | $1,000,000 |
Note_2_Accounting_Policies_Det
Note 2. Accounting Policies (Details) (USD $) | 3 Months Ended | ||
Jun. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' |
Allowance for doubtful accounts | ' | $40,000 | $117,098 |
Tax expense | 2,267,969 | ' | ' |
Accumulated comprehensive income, from foreign currency translation | ' | $42,502 | $42,502 |
Number of shares outsanding | ' | 226,500 | 285,000 |
Note_2_Accounting_Policies_Int
Note 2. Accounting Policies Intangible Assets (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | |
Patents and Trademarks [Member] | ' | ' |
Estimated useful life (in years) | 13 | ' |
Gross | $443,201 | $480,750 |
Accumulated amortization | -420,936 | -456,361 |
Net | 22,265 | 24,389 |
Patents and Trademarks not yet in service [Member] | ' | ' |
Estimated useful life (in years) | 0 | ' |
Gross | 141,923 | 110,702 |
Accumulated amortization | 0 | 0 |
Net | 141,923 | 110,702 |
Trade Names [Member] | ' | ' |
Estimated useful life (in years) | 8 | ' |
Gross | 33,250 | 33,250 |
Accumulated amortization | -13,971 | -12,250 |
Net | 19,279 | 21,000 |
Total Intangible Assets [Member] | ' | ' |
Gross | 618,374 | 624,702 |
Accumulated amortization | -434,907 | -468,611 |
Net | $183,467 | $156,091 |
Note_2_Accounting_Policies_Bas
Note 2. Accounting Policies Basic and Diluited EPS (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Basic and Diluted EPS [Line Items] | ' | ' | ' | ' |
Net loss available to common shareholders | ($565,551) | ($3,448,607) | ($3,461,413) | ($4,929,611) |
Weighted average common shares outstanding | ' | ' | 2,704,239 | 2,790,514 |
Continuing operations | ($0.21) | ($0.52) | ($1.27) | ($0.50) |
Discontinued operations | $0 | ($0.72) | ($0.01) | ($1.26) |
Loss per share - basic and diluted | ($0.21) | ($1.24) | ($1.28) | ($1.76) |
Note_3_Inventories_Details
Note 3. Inventories (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Inventories [Line Items] | ' | ' |
Raw materials | $1,062,042 | $521,908 |
Work-in-process | 302,891 | 248,159 |
Finished goods | 1,289,078 | 1,645,037 |
Total | 2,654,011 | 2,415,104 |
Silver intentory | 446,664 | 541,804 |
Reserve for slow moving and obsolete inventory | $373,000 | ($317,484) |
Note_4_Plant_Property_Equipmen2
Note 4. Plant, Property & Equipment, net (Details) (USD $) | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Machinery and equipment | $13,492,740 | ' | $12,298,011 |
Buildings and improvements | 4,298,556 | ' | 4,293,725 |
Vehicles | 94,227 | ' | 94,227 |
Furniture, fixtures, computers and software | 1,263,879 | ' | 1,246,807 |
Land | 202,492 | ' | 202,492 |
Construction in progress | 264,750 | ' | 103,269 |
Total property, plant and equipment | 19,616,644 | ' | 18,238,531 |
Less: accumulated depreciation | -12,071,369 | ' | -11,080,019 |
Property, plant and equipment, net | 7,545,275 | ' | 7,158,512 |
Depreciation expense | ($1,067,812) | ($1,069,967) | ' |
Minimum [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Machinery and equipment, asset life, years | 3 | ' | ' |
Vehicles, asset life, years | 3 | ' | ' |
Furniture, fixtures, computers and software, asset life, years | 3 | ' | ' |
Maximum [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Machinery and equipment, asset life, years | 15 | ' | ' |
Vehicles, asset life, years | 5 | ' | ' |
Furniture, fixtures, computers and software, asset life, years | 5 | ' | ' |
Service Life [Member] | ' | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' | ' |
Building and improvements, asset life, years | 20 | ' | ' |
Note_5_Debt_Details
Note 5. Debt (Details) (USD $) | Sep. 30, 2013 | Apr. 30, 2013 | Mar. 29, 2013 | Jan. 31, 2013 | Dec. 31, 2012 |
Outstanding debt, details [Abstract] | ' | ' | ' | ' | ' |
Revolving line of credit | ' | ' | $4,000,000 | ' | ' |
Revolving line of credit, outstanding principal balance | 2,399,493 | ' | ' | ' | 0 |
Revolving line of credit, interest rate | 3.50% | ' | ' | ' | ' |
Percent borrowable of net elegible recievables, revolving line of credit | 80.00% | ' | ' | ' | ' |
Percent borrowable of net eligible raw materials inventory, revolving line of credit | 50.00% | ' | ' | ' | ' |
Previous demand line of credit, replaced by current revolver | ' | 3,000,000 | ' | ' | ' |
Commercial term loan | ' | ' | 1,500,000 | ' | ' |
Commercial term loan, outstanding amount remaining | 1,363,909 | ' | ' | ' | ' |
Commercial term loan, interest rate | 4.25% | ' | ' | ' | ' |
Equipment line of credit | ' | ' | 1,000,000 | ' | ' |
Equipment line of credit, outstanding principal balance | 177,251 | ' | ' | ' | ' |
Equipment notes, to acquire production equipment | ' | ' | ' | 272,500 | ' |
Equipment line of credit, interest rate | 3.50% | ' | ' | ' | ' |
Equipment notes, amount outstanding | $234,646 | ' | ' | ' | ' |
Note_6_Income_Taxes_Details
Note 6. Income Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Income Taxes | ' | ' | ' | ' | ' |
Income tax (benefit) provision from continuing operations | $0 | ' | ($296,133) | $2,267,969 | ($609,623) |
Tax expense | ' | 2,267,969 | ' | ' | ' |
Income tax benefit, discontinud operations | ' | ' | $1,190,580 | ' | $1,731,580 |
Note_7_Commitments_and_Conting1
Note 7. Commitments and Contingencies (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Commitments and Contingencies [Line Items] | ' | ' | ' | ' |
Legal matters, approximate costs | ' | ' | $700,000 | ' |
Lease Expense | $0 | $52,854 | $50,781 | $158,562 |
Note_8_ShareBased_Compensation2
Note 8. Share-Based Compensation (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2010 | |
Share-based Compensation Expense [Line Items] | ' | ' | ' | ' | ' |
Share-based Compensation Expense | $12,900 | $20,148 | $40,646 | $84,650 | ' |
Cost related to non-vested share-based compensation, not yet recognized | $84,761 | ' | $84,761 | ' | ' |
Period to recognize cost related to non-vested share-based compensation arrangements | 2.83 | ' | 2.83 | ' | ' |
Share-based insentive plan [Abstract] | ' | ' | ' | ' | ' |
Aggregate shares authorized for issuance | ' | ' | ' | ' | 500,000 |
Common stock included in the '2010 Plan' | ' | ' | ' | ' | 400,000 |
Shares reserved for the '2005 Plan' | ' | ' | ' | ' | 100,000 |
Shares available for future grants '2010 Plan' | 375,000 | ' | 375,000 | ' | ' |
Note_8_ShareBased_Compensation3
Note 8. Share-Based Compensation Stock Option Transactions (Details) (USD $) | Sep. 30, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
Shares outstanding | Shares exercisable | Granted during period | Exercised during period | Forfeited/expired during period | Shares outstanding | Shares exercisable | ||
Share-based Compensation [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Number of Shares | ' | 285,000 | 138,900 | 15,000 | 0 | -73,500 | 226,500 | 142,500 |
Weighted average exercise price | ' | $2.44 | $2.53 | $2.58 | $0 | ' | $6.16 | $6.39 |
Remaining contractual term (years) | ' | 4.8 | 3.1 | 9.75 | 0 | 0 | 4.62 | 3.28 |
Aggregate intrinsic value | $0 | $0 | $0 | $0 | $0 | $0 | $1,800 | $0 |
Note_8_ShareBased_Compensation4
Note 8. Share-Based Compensation Non- Vested Options (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | |
Stock Options [Member] | ' | ' |
Share-based Compensation [Line Items] | ' | ' |
Non-vested shares, December 31, 2012 | ' | 146,100 |
Non-vested options, Granted During Period, Shares | 15,000 | ' |
Non-vested options, Vested During Period, number | -48,300 | ' |
Non-vested Options, Forfeited/Expired during period, number | -28,800 | ' |
Non-vested shares, September 30, 2013 | 84,000 | ' |
Weighted Average [Member] | ' | ' |
Share-based Compensation [Line Items] | ' | ' |
Non-vested shares, fair value - December 31, 2012 | ' | 1.22 |
Non-vested options, Granted During Period, Fair Value | 0.82 | ' |
Non-vested options, Vested During Period, Fair Value | 1.5 | ' |
Non-vested options, Forfeited/Expired during period, Fair Value | 1.28 | ' |
Non-vested shares, fair value - Septemeber 30, 2013 | 0.97 | ' |
Note_9_Discontinued_Operations2
Note 9. Discontinued Operations (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Discontinued operations, details [Abstract] | ' | ' | ' | ' |
Net revenues from discontinued operations | $0 | $132,137 | $0 | $372,955 |
Income (loss) from discontinued operations, net | 3,977 | -1,996,055 | -16,569 | -3,523,380 |
Income tax expense, discontined operations | ' | 0 | 0 | ' |
Income tax benefit, discontinud operations | ' | 1,190,580 | ' | 1,731,580 |
Unmet performance obligation | $1,000,000 | ' | $1,000,000 | ' |
Note_9_Discontinued_Operations3
Note 9. Discontinued Operations Condensed Balance Sheet (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Condensed Consolidated Balance Sheet | ' | ' |
Cash | $4,285 | $30,882 |
Prepaid expenses and other assets | 0 | 3,419 |
Total current assets from discontinued operations | 4,285 | 34,301 |
Property and equipment, net of impairment and accumulated depreciation of $119,050 and $1,434,937, respectively | 0 | 284,300 |
Deferred taxes, non-current | 0 | 0 |
Total non-current assets from discontinued operations | 0 | 284,300 |
Total assets from discontinued operations | 4,285 | 318,601 |
Accounts payable | 319,937 | 477,324 |
Accrued expenses | 0 | 123,247 |
Total current liabilities from discontinued operations | 319,937 | 600,571 |
Total liabilities from discontinued operations | $319,937 | $600,571 |
Note_10_Reclassification_of_pr2
Note 10. Reclassification of prior periods Balance Sheet (Details) (USD $) | Sep. 30, 2012 |
As Originally Reported [Member] | ' |
Current Assets: | ' |
Deferred income taxes | $0 |
Deposits, prepaid expenses and other current assets | 745,531 |
Total current assets | 7,962,690 |
Other non-current assets | 0 |
Total assets | 17,632,493 |
Current liabilities: | ' |
Deferred revenue | 0 |
Total current liabilities | 5,595,292 |
Long-term liabilities: | ' |
Long-term deferred revenue | 0 |
Total long-term liabilities | 1,068,992 |
Total liabilities | 6,664,284 |
Shareholders' equity: | ' |
Retained earning | 3,139,296 |
Total shareholders' equity | 10,968,209 |
Total liabilities and shareholders' equity | 17,632,493 |
Correction of error adjustment [Member] | ' |
Current Assets: | ' |
Deferred income taxes | 59,493 |
Deposits, prepaid expenses and other current assets | 222,019 |
Total current assets | 281,512 |
Other non-current assets | 218,299 |
Total assets | 499,811 |
Current liabilities: | ' |
Deferred revenue | 281,746 |
Total current liabilities | 281,746 |
Long-term liabilities: | ' |
Long-term deferred revenue | 309,377 |
Total long-term liabilities | 309,377 |
Total liabilities | 591,123 |
Shareholders' equity: | ' |
Retained earning | -91,312 |
Total shareholders' equity | -91,312 |
Total liabilities and shareholders' equity | 499,811 |
As Revised [Member] | ' |
Current Assets: | ' |
Deferred income taxes | 59,493 |
Deposits, prepaid expenses and other current assets | 967,550 |
Total current assets | 8,244,202 |
Other non-current assets | 218,299 |
Total assets | 18,132,304 |
Current liabilities: | ' |
Deferred revenue | 281,746 |
Total current liabilities | 5,877,038 |
Long-term liabilities: | ' |
Long-term deferred revenue | 309,377 |
Total long-term liabilities | 1,378,369 |
Total liabilities | 7,255,407 |
Shareholders' equity: | ' |
Retained earning | 3,047,984 |
Total shareholders' equity | 10,876,897 |
Total liabilities and shareholders' equity | $18,132,304 |
Note_10_Reclassification_of_pr3
Note 10. Reclassification of prior periods Statement of Operations (Details) (USD $) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2012 | Sep. 30, 2012 | |
As Originally Reported [Member] | ' | ' |
Reclassification of Prior Periods, Statment of Operations [Line Items] | ' | ' |
Net revenues | $4,839,812 | $15,881,161 |
Cost of sales | 4,112,599 | 13,106,456 |
Gross profit | 727,213 | 2,774,705 |
Loss from operations | -1,774,241 | -1,918,649 |
Loss before taxes | -1,782,569 | -1,941,780 |
Income tax benefit | -309,500 | -580,400 |
Loss before discontinued operations | -1,473,069 | -1,361,380 |
Net loss | -3,469,124 | -4,884,758 |
Loss per share - basic and diluted | ($1.24) | ($1.75) |
Weighted average shares outstanding, basic and diluted | 2,790,514 | 2,790,514 |
Correction of error adjustment [Member] | ' | ' |
Reclassification of Prior Periods, Statment of Operations [Line Items] | ' | ' |
Net revenues | 119,222 | -296,004 |
Cost of sales | 85,338 | -221,930 |
Gross profit | 33,884 | -74,074 |
Loss from operations | 33,884 | -74,074 |
Loss before taxes | 33,884 | -74,074 |
Income tax benefit | 13,367 | -29,223 |
Loss before discontinued operations | 20,517 | -44,851 |
Net loss | 20,517 | -44,851 |
Loss per share - basic and diluted | $0.01 | ($0.02) |
Weighted average shares outstanding, basic and diluted | 2,790,514 | 2,790,514 |
As Revised [Member] | ' | ' |
Reclassification of Prior Periods, Statment of Operations [Line Items] | ' | ' |
Net revenues | 4,959,034 | 15,585,157 |
Cost of sales | 4,197,937 | 12,884,526 |
Gross profit | 761,097 | 2,700,631 |
Loss from operations | -1,740,357 | -1,992,723 |
Loss before taxes | -1,748,685 | -2,015,854 |
Income tax benefit | -296,133 | -609,623 |
Loss before discontinued operations | -1,452,552 | -1,406,231 |
Net loss | ($3,448,607) | ($4,929,611) |
Loss per share - basic and diluted | ($1.24) | ($1.76) |
Weighted average shares outstanding, basic and diluted | 2,790,514 | 2,790,514 |
Note_10_Reclassification_of_pr4
Note 10. Reclassification of prior periods Statement of Cash Flows (Details) (USD $) | 9 Months Ended |
Sep. 30, 2012 | |
As Originally Reported [Member] | ' |
Statement of cash flows, period reclassification [Line Items] | ' |
Net loss | ($4,884,758) |
Deferred income taxes | -575,900 |
Deposits, prepaid expenses and other assets | -254,598 |
Accrued expenses and other liabilities | -119,498 |
Net cash used in operating activities | -1,498,361 |
Correction of error adjustment [Member] | ' |
Statement of cash flows, period reclassification [Line Items] | ' |
Net loss | -44,853 |
Deferred income taxes | -29,223 |
Deposits, prepaid expenses and other assets | -221,930 |
Accrued expenses and other liabilities | 296,004 |
Net cash used in operating activities | 0 |
As Revised [Member] | ' |
Statement of cash flows, period reclassification [Line Items] | ' |
Net loss | -4,929,611 |
Deferred income taxes | -605,123 |
Deposits, prepaid expenses and other assets | -476,528 |
Accrued expenses and other liabilities | 176,506 |
Net cash used in operating activities | ($1,498,361) |