Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 09, 2017 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | ZYNEX INC | |
Entity Central Index Key | 846,475 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | ZYXI | |
Entity Common Stock, Shares Outstanding | 32,048,484 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 140 | $ 247 |
Accounts receivable, net | 2,505 | 3,028 |
Inventory, net | 178 | 107 |
Prepaid expenses | 125 | 40 |
Total current assets | 2,948 | 3,422 |
Property and equipment, net | 497 | 580 |
Deposits | 55 | 55 |
Amortizable intangible assets, net | 21 | 34 |
Total assets | 3,521 | 4,091 |
Current liabilities: | ||
Line of credit | 0 | 2,771 |
Current portion of unsecured subordinated promissory notes | 518 | 0 |
Current portion of capital leases | 120 | 118 |
Accounts payable and accrued expenses | 2,447 | 3,190 |
Deferred revenue | 0 | 54 |
Accrued payroll and related taxes | 659 | 732 |
Deferred insurance reimbursement | 880 | 880 |
Total current liabilities | 4,624 | 7,745 |
Long-term liabilities: | ||
Obligation to issue common stock to private placement noteholders | 466 | 0 |
Capital leases, less current portion | 73 | 136 |
Warranty liability | 12 | 12 |
Total liabilities | 5,175 | 7,893 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of June 30, 2017 and December 31, 2016 | 0 | 0 |
Common stock, $0.001 par value; 100,000,000 shares authorized; 32,048,484 and 31,271,234 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 32 | 31 |
Additional paid-in capital | 6,322 | 6,032 |
Accumulated deficit | (7,919) | (9,776) |
Total Zynex, Inc. stockholders’ deficit | (1,565) | (3,713) |
Non-controlling interest | (89) | (89) |
Total stockholders’ deficit | (1,654) | (3,802) |
Total liabilities and stockholders’ deficit | $ 3,521 | $ 4,091 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares, Issued | 32,048,484 | 31,271,234 |
Common Stock, Shares, Outstanding | 32,048,484 | 31,271,234 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
NET REVENUE | ||||
Product devices | $ 2,464 | $ 2,100 | $ 4,326 | $ 4,682 |
Product supplies | 2,578 | 1,186 | 4,152 | 2,081 |
Total revenue | 5,042 | 3,286 | 8,478 | 6,763 |
COSTS OF REVENUE AND OPERATING EXPENSES | ||||
Costs of revenue - rental, product & supply | 1,020 | 941 | 1,943 | 1,924 |
Selling, general and administrative expense | 2,088 | 2,495 | 4,118 | 5,339 |
Total costs of revenue and operating expenses | 3,108 | 3,436 | 6,061 | 7,263 |
Income (loss) from operations | 1,934 | (150) | 2,417 | (500) |
Other income (expense) | ||||
Interest expense | (394) | (77) | (515) | (172) |
Other income (expense), net | (394) | (77) | (515) | (172) |
Income (loss) from operations before income taxes | 1,540 | (227) | 1,902 | (672) |
Income tax expense | 36 | 0 | 45 | 0 |
Net Income (loss) | 1,504 | (227) | 1,857 | (672) |
Plus: Net loss - noncontrolling interest | 0 | 0 | 0 | 0 |
Net income (loss) - attributable to Zynex, Inc. | $ 1,504 | $ (227) | $ 1,857 | $ (672) |
Net income (loss) per share attributable to Zynex, Inc.: | ||||
Basic | $ 0.05 | $ (0.01) | $ 0.06 | $ (0.02) |
Diluted | $ 0.05 | $ (0.01) | $ 0.06 | $ (0.02) |
Weighted average basic shares outstanding | 32,048 | 31,271 | 31,790 | 31,271 |
Weighted average diluted shares outstanding | 33,262 | 31,271 | 32,413 | 31,271 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net cash provided by (used in) operating activities | $ 1,890 | $ 769 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Change in inventory used for rental | (45) | 6 |
Net cash provided by (used in) investing activities | (45) | 6 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net (repayments) borrowings on line of credit | (2,771) | (718) |
Proceeds from unsecured subordinated promissory notes | 1,035 | 0 |
Payment of commission and placement agent fees and related expenses | (155) | 0 |
Payments on capital lease obligations | (61) | (36) |
Net cash used in financing activities | (1,952) | (754) |
Net decrease in cash and cash equivalents | (107) | 21 |
Cash and cash equivalents at beginning of period | 247 | 8 |
Cash and cash equivalents at end of period | 140 | 29 |
Supplemental disclosure of cash and non-cash transactions: | ||
Interest paid | $ 157 | $ 172 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | (1) BASIS OF PRESENTATION Organization Zynex, Inc. (a Nevada corporation) has its headquarters in Lone Tree, Colorado. As of June 30, 2017, the Company’s only active subsidiary is Zynex Medical, Inc. (“ZMI,” a wholly-owned Colorado corporation) through which the Company conducts most of its operations. One other subsidiary, Zynex Europe, ApS (“ZEU,” a wholly-owned Denmark corporation), did not generate any revenue during the three or six months ended June 30, 2017 and 2016 from international sales and marketing. Zynex Monitoring Solutions, Inc. (“ZMS,” a wholly-owned Colorado corporation) is developing a blood volume monitoring device, but it is not yet developed or ready for market and, as a result, ZMS has achieved no revenues to date. Its inactive subsidiaries include Zynex NeuroDiagnostics, Inc. (“ZND,” a wholly-owned Colorado corporation), Zynex Billing and Consulting, LLC (“ZBC,” an 80 The term “the Company” refers to Zynex, Inc. and its active and inactive subsidiaries. Liquidity During 2013-2015, the Company suffered operating losses which caused a lack of liquidity and a substantial working capital deficit. This raised substantial doubt about the Company’s ability to continue as a going concern. During 2016, the Company generated net income during Q3 and Q4 and combined with the profitability in Q1 and Q2 of 2017, the Company has recorded four consecutive profitable quarters and paid off its line of credit with Triumph Healthcare Finance, a division of TBK Bank, SSB, formerly known as Triumph Community Bank, (“Triumph”) (Note 6). The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business but as the Company continues to generate increased revenues, improved collections and profits, management believes the Company will be in a position to fund its obligations for the foreseeable future through operating cash flows. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Nature of Business ZMI designs, manufactures and markets U.S. Food and Drug Administration (FDA) cleared medical devices that treat chronic and acute pain, as well as activate and exercise muscles for rehabilitative purposes with electrical stimulation. ZEU was formed in 2012 to conduct international sales and marketing for Company products. In addition, ZMI dba Pharmazy, which sold compound transdermal pain cream, began operations in early 2014 and was closed in January 2016. ZMS was formed to develop and market medical devices for non-invasive cardiac monitoring, the products of which are under development. The Company is currently developing a blood volume monitoring device (Blood Volume Monitor). ZMS produced no revenues during the three or six months ended June 30, 2017 and 2016. During the three and six months ended June 30, 2017 and 2016, the Company generated substantially all of its revenue ( 99.99 The unaudited condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included herein are adequate to make the information presented not misleading. A description of the Company’s accounting policies and other financial information is included in the audited consolidated financial statements as filed with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Amounts as of December 31, 2016, are derived from those audited consolidated financial statements. These interim condensed consolidated financial statements should be read in conjunction with the annual audited financial statements, accounting policies and notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, which has previously been filed with the SEC. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as of June 30, 2017 and the results of its operations and its cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2017, are not necessarily indicative of the results that may be achieved for a full fiscal year and cannot be used to indicate financial performance for the entire year. The accompanying consolidated financial statements include the accounts of Zynex, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Non-controlling interest in the equity of a subsidiary is accounted for and reported as stockholders’ (deficit) equity. Non-controlling interest represents the 20 Certain reclassifications have been made to the 2016 financial statements to conform to the consolidated 2017 financial statement presentation. These reclassifications had no effect on net earnings or cash flows as previously reported. Preparation of financial statements in conformity with U.S. GAAP 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. The most significant management estimates used in the preparation of the accompanying consolidated financial statements are associated with the allowance for billing adjustments and uncollectible accounts receivable, the reserve for obsolete and damaged inventory, the life of its rented equipment, stock-based compensation, and valuation of long-lived assets and realizability of deferred tax assets. The Company recognizes revenue when each of the following four conditions are met: 1) a contract or sales arrangement exists, 2) products have been shipped and title has transferred, or rental services have been rendered, 3) the price of the products or services is fixed or determinable, and 4) collectability is reasonably assured. The Company recognizes revenue when medical units and supplies are shipped or, for medical units sold from consigned inventory, when it receives notice that the product has been prescribed and delivered to the patient. The Company, prior to recognizing revenue verifies the patient’s insurance coverage or obtains the insurance company preauthorization, when required. Revenue from supplies is recognized upon shipment. Revenue from the rental of products is normally on a month-to-month basis and is recognized ratably over the products’ rental period. Revenue from sales to distributors is recognized when the Company ships its products. Revenue is reported net, after adjustments for estimated insurance company or governmental agency (collectively “Third-party Payors”) reimbursement deductions and, for wholesale customers and patient billings, an allowance for uncollectible accounts. The Third-party Payor reimbursement deductions are known throughout the health care industry as “billing adjustments” whereby the Third-party Payors unilaterally reduce the amount they reimburse for the Company’s products. A significant portion of the Company’s revenues are derived, and the related receivables are due, from Third-party Payors. The nature of these receivables within the medical industry has typically resulted in long collection cycles. The process of determining what products will be reimbursed by Third-party Payors and the amounts that they will reimburse is complex and depends on conditions and procedures that vary among providers and may change from time to time. The Company maintains an allowance for billing adjustments and an allowance for doubtful accounts. Billing adjustments result from reimbursements from Third-party Payors that are less than amounts claimed and from where the amount claimed by the Company exceeds the Third-party Payors usual, customary and reasonable reimbursement rate. The Company determines the amount of the allowance and adjusts it at the end of each reporting period, based on a number of factors, including historical rates of collection, the aging of the receivables, trends in the historical rates of collection and current relationships and experience with the Third-party Payors. If the rates of collection of past-due receivables recorded for previous fiscal periods changes, or if there is a trend in the rates of collection on those receivables, the Company may be required to change the rate at which it provides for additions to the allowance. A change in the rates of the Company’s collections can result from a number of factors, including experience and training of billing personnel, changes in the reimbursement policies or practices of Third-party Payors, or changes in industry rates of reimbursement. We believe we have a sufficient history of collection experience to estimate the net collectible amounts by payor. However, changes to the allowance for billing adjustments and uncollectible accounts, which are recorded in the income statement as a reduction of revenue, have historically fluctuated and may continue to fluctuate significantly from quarter to quarter and year to year. Due to the nature of the medical industry and the reimbursement environment in which the Company operates, estimates are required to record net revenues and accounts receivable at their net realizable values (also known as net collectible value). Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of third-party billing arrangements and the uncertainty of reimbursement amounts for certain products or services from payors or unanticipated requirements to refund payments previously received may result in adjustments to amounts originally recorded. Due to continuing changes in the health care industry and third-party reimbursement, as well as changes in our billing practices to increase cash collections, it is possible that management’s estimates could change in the near term, which could have an impact on our results of operations and cash flows. Any differences between estimated settlements and final determinations are reflected as an increase or a reduction to revenue in the period when such final determinations are known. The Company frequently receives refund requests from insurance providers relating to specific patients and dates of service. Billing and reimbursement disputes are very common in the Company’s industry. These requests are sometimes related to a limited number of patients or products; at other times, they include a significant number of refund claims in a single request. The Company reviews and evaluates these requests and determines if any refund request is appropriate. The Company also reviews these refund claims when it is rebilling or pursuing reimbursement from insurance providers. The Company frequently has significant offsets against such refund requests, and sometimes amounts are due to the Company in excess of the amounts of refunds requested by the insurance providers. Therefore, at the time of receipt of such refund requests, the Company is generally unable to determine if a refund request is valid and should be accrued. Such refunds are accrued when the amount is fixed and determinable. However, no assurances can be given with respect to such estimates of reimbursements and offsets or the ultimate outcome of any refund requests. In addition to the allowance for billing adjustments, the Company records an allowance for uncollectible accounts receivable for wholesale (sales to distributors) sales and certain patient billings. Uncollectible accounts receivable are primarily a result of non-payment from patients who have been direct billed for co-payments or deductibles, lack of appropriate insurance coverage and disallowances of charges by Third-party Payors. If there is a change to a material insurance provider contract or policy, application by a provider, a decline in the economic condition of providers or a significant turnover of Company billing personnel resulting in diminished collection effectiveness, the estimate of the allowance for uncollectible accounts receivable may not be adequate and may result in an increase in the future. The Company’s financial instruments include cash, accounts receivable, accounts payable and income taxes, for which current carrying amounts approximate fair value due to their short-term nature. Financial instruments also include the line of credit and capitalized leases, the carrying value of which approximates fair value because the interest rates on the outstanding borrowings are at rates that approximate market rates for borrowings with similar terms and average maturities. Inventory, which primarily represents finished goods, are valued at the lower of cost (average) or market. The Company monitors inventory for turnover and obsolescence and records losses for excess and obsolete inventory, as appropriate. The Company provides reserves for estimated excess and obsolete inventories equal to the difference between the costs of inventories on hand and the estimated market value based upon assumptions about future demand. If future demand is less favorable than currently projected by management, additional inventory write-downs may be required. We define operating segments as components of our enterprise for which separate financial information is reviewed regularly by the chief operating decision-makers to evaluate performance and to make operating decisions. We have identified our Chief Executive Officer and Chief Financial Officer as our chief operating decision-makers (“CODM”). We currently operate our business as one operating segment which includes two revenue types: Product devices and Product supplies. Total assets by segment have not been disclosed as the information is not available to the chief operating decision-makers. In June 2016, FASB issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326) ("ASU 2016-13"), Measurement of Credit Losses on Financial Instruments. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income. The standard will replace today's "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. This ASU is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. We are currently evaluating the impact that the adoption of ASU 2016-13 will have on our financial condition, results of operations and cash flows. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). These amendments require the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases under ASC 840 “Leases”. These amendments also require qualitative disclosures along with specific quantitative disclosures. These amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Entities are required to apply the amendments at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the impact that the adoption of ASU 2016-02 will have on our financial condition, results of operations and cash flows. In May 2014, the FASB issued ASU No. 2014-09“Revenue from Contracts with Customers” (Topic 606) which amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This accounting guidance is effective for the Company beginning in the first quarter of fiscal year 2018, using one of two prescribed retrospective methods. The Company is evaluating the impact of the amended revenue recognition guidance on the Company’s consolidated financial statements. Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a material impact on the Company’s consolidated financial statements. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | (2) PROPERTY AND EQUIPMENT June 30, December 31, Useful (UNAUDITED) Office furniture and equipment $ 911 $ 911 3-7 years Rental inventory 1,456 1,411 5 years Vehicles 76 76 5 years Assembly equipment 125 125 7 years 2,568 2,523 Less accumulated depreciation (2,071) (1,943) $ 497 $ 580 |
EARNING (LOSS) PER SHARE
EARNING (LOSS) PER SHARE | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
EARNING (LOSS) PER SHARE | (3) EARNING (LOSS) PER SHARE Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net loss by the weighted-average number of common shares outstanding and the number of dilutive potential common share equivalents during the period, calculated using the treasury-stock method for outstanding stock options. For the Three Months Ended June 30, For the Six Months Ended June 30, 2017 2016 2017 2016 Basic income per share: Net income available to common stockholders $ 1,504 $ (227) $ 1,857 $ (672) Basic weighted average shares outstanding 32,048 31,271 31,790 31,271 Basic income per share: $ 0.05 $ (0.01) $ 0.06 $ (0.02) Diluted income per share: Net income available to common stockholders $ 1,504 $ (227) $ 1,857 $ (672) Weighted average shares outstanding 32,048 31,271 31,790 31,271 Effect of dilutive securities - options and restricted stock 1,214 - 623 - Diluted weighted average shares outstanding 33,262 31,271 32,413 31,271 Diluted income per share: $ 0.05 $ (0.01) $ 0.06 $ (0.02) For the three and six months ended June 30, 2017, 1.0 1.1 For the three and six months ended June 30, 2016, 2.2 2.3 For the three and six months ended June 30, 2017, the dilutive securities calculation includes 776,250 |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION PLANS | (4) STOCK-BASED COMPENSATION PLANS In June 2017, our stockholders approved the 2017 Stock Incentive Plan (the “2017 Stock Plan”) with a maximum of 5,000,000 210,000 During the three and six months ended June 30, 2017, 10,000 The Company previously reserved 3,000,000 December 31, 2014 The following summarizes stock-based compensation expenses recorded in the condensed consolidated statement of operations: In the three and six months ended June 30, 2017, the Company recorded compensation expense related to stock options of $ 13,000 37,000 respectively, all of which was recorded in selling, general and administrative expense on the accompanying condensed consolidated statement of operations. In the three and six months ended June 30, 2016, the Company recorded compensation expense related to stock options 16,000 159,000 all of which was recorded in selling, general and administrative expense on the accompanying condensed consolidated statement of operations. During the three and six months ended June 30, 2017, the Company granted options to purchase up 270,000 and 435,000 0.39 and $ 0.32 0.34 0.32 During the three and six months ended June 30, 2016, the Company granted options to purchase up to 270,000 754,000 0.32 0.27 0.27 0.35 No options were exercised during the three or six months ended June 30, 2017 or 2016. For the Three Months Ended June 30, For the Six Months Ended June 30, 2017 2016 2017 2016 Expected term (years) 6.25 6.25 6.25 6.25 Risk-free interest rate 1.83 % 1.28 % 1.76 % 1.54 % Expected volatility 122.85 % 122.99 % 125.20 % 122.61 % Expected dividend yield 0.00 % 0.00 % 0.00 % 0.00 % Number Weighted Weighted Aggregate Outstanding at December 31, 2016 2,190 $ 0.40 6.73 $ 124 Granted 435 $ 0.32 Exercised Forfeited (741) $ 0.31 Outstanding at June 30, 2017 1,884 $ 0.42 6.53 $ 498 Exercisable at June 30, 2017 1,374 $ 0.45 5.58 $ 356 As of June 30, 2017, the Company had approximately $ 87,000 3.42 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | (5) INCOME TAXES The provision for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year. The Company’s effective income tax rate was 2 , and resulted in income tax expense of $ 36,000 45,000 There was no income tax expense during the three or six months ended June 30, 2016. The realization of any deferred tax assets is not more likely than not and a full valuation allowance has been recorded by the Company. The Company paid no income taxes during the three or six months ended June 30, 2017 or 2016. |
LINE OF CREDIT
LINE OF CREDIT | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
LINE OF CREDIT | (6) LINE OF CREDIT The Company had an asset-backed revolving credit facility under a Loan and Security Agreement as amended, (the “Triumph Agreement”) with Triumph Healthcare Finance. This credit facility was paid in full on June 30, 2017. The Triumph Agreement contained certain customary restrictive and financial covenants for asset-backed credit facilities. The Company had not been in compliance with the financial covenants under the Triumph Agreement since July 2014. On July 14, 2014, the Company received notice from the Lender of an event of default under the Triumph Agreement. The notice relates to the Company’s default under the minimum debt service coverage ratio requirement for the quarter ended March 31, 2014 and certain other alleged defaults. The Lender notified the Company that it was exercising its default remedies under the Triumph Agreement, including, among others, accelerating the repayment of all outstanding obligations under the Triumph Agreement (outstanding principal and accrued interest) and collecting the Company’s bank deposits to apply towards the outstanding obligations. As of June 30, 2017, $ 0 2.8 11.0 6.75 3 1.25 December 19, 2014 250,000 50,000 Contractual term 5.0 years Volatility 122.44 % Risk-free interest rate 1.00 % Dividend yield 1.44 % During the three months ended March 31, 2016, the Company recorded bank fee expense related to this stock warrant of $ 15,000 |
PRIVATE PLACEMENT MEMORANDUM
PRIVATE PLACEMENT MEMORANDUM | 6 Months Ended |
Jun. 30, 2017 | |
Private Placement Memorandum Disclosure [Abstract] | |
Private Placement Memorandum Disclosure [Text Block] | (7) PRIVATE PLACEMENT MEMORANDUM Commencing in November of 2016, the Company conducted a private placement on a “best efforts, minimum-maximum” basis of 12% unsecured subordinated promissory notes, for a minimum of $ 1,000 1,500 1,035 June 28, 2018 5 10 155 776,250 255 776,250 342 The common stock to be issued to the note holders represents additional interest expense and had been initially recorded as a liability and will be adjusted each reporting period based upon the fair value of the underlying stock to be issued until settled at the end of August 2017. 111 148 . Also, included in interest expense is the increase in value of the common shares to be issued to the private placement noteholders from the date of issue of approximately $211,000 for the three and six month periods June 30, 2017 June 30, 2017 Proceeds from unsecured subordinated promissory notes $ 1,035 Less debt issuance costs and discount Payment of commission and placement agent fees and related expenses (155) Non-cash activity Common stock issued to placement agent (255) Obligation to issue common stock to private placement noteholders (255) Amortization of issuance costs and debt discount 148 Unsecured subordinated promissory notes, net of issuance and debt discount 518 Current portion of unsecured subordinated promissory notes (518) Long-term portion of unsecured subordinated promissory notes $ - |
DEFERRED INSURANCE REIMBURSEMEN
DEFERRED INSURANCE REIMBURSEMENT | 6 Months Ended |
Jun. 30, 2017 | |
Insurance [Abstract] | |
DEFERRED INSURANCE REIMBURSEMENT | (8) DEFERRED INSURANCE REIMBURSEMENT During the first quarter of 2016, the Company collected $ 880 880 |
CAPITAL LEASES AND OTHER OBLIGA
CAPITAL LEASES AND OTHER OBLIGATIONS | 6 Months Ended |
Jun. 30, 2017 | |
Leases, Capital [Abstract] | |
CAPITAL LEASES AND OTHER OBLIGATIONS | (9) CAPITAL LEASES AND OTHER OBLIGATIONS The Company had previously entered into a Lease Termination Agreement (“LTA”) and new Lease Agreement (“LA”) with its landlord relating to the Company’s headquarters location in Lone Tree, Colorado, under which the Company reduced the amount of space leased at its headquarters. Subsequently, on August 12, 2016, the Company entered into an amended Lease Agreement to extend and amend the terms and conditions of the LA. The following is a summary of the key terms of the LA, as amended: · The original term of the LA term was extended by two years and as amended is to end, unless sooner terminated, on December 31, 2018 · Fixed rental payments were decreased from $ 49 38 · The Company and landlord shall each have the right to terminate the lease at any time, without liability to the other, with ninety days (originally six months) prior written notice to the Company and ninety days written notice to the Landlord. The Company also leases certain equipment under capital leases which expire on various dates through 2018. Imputed interest rates on the leases range from approximately 5 10 461 333 |
CONCENTRATIONS
CONCENTRATIONS | 6 Months Ended |
Jun. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | (10) CONCENTRATIONS The Company sourced approximately 65 three significant vendors (defined as supplying at least 10 45 . For the three and six months ended June 30, 2016, one significant vendor sourced 35 40 The Company had receivables from a private health insurance carrier at June 30, 2017 and December 31, 2016, that made up approximately 14 10 |
LITIGATION
LITIGATION | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
LITIGATION | (11) LITIGATION From time to time, the Company may become party to litigation and other claims in the ordinary course of business. To the extent that such claims and litigation arise, management would provide for them if losses are determined to be both probable and estimable. The Company is currently not a party to any material pending legal proceedings. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | ( 12) RELATED PARTY TRANSACTIONS The Company employs Mr. Martin Sandgaard and Mr. Joachim Sandgaard, both sons of Thomas Sandgaard. Compensation was $ 41 33 83 60 3 100,000 Related party payables primarily consist of advances made to the Company and inventory purchases made on behalf of the Company. Accrued liabilities as of June 30, 2017 and December 31, 2016 include a net payable to Thomas Sandgaard of $ 0 75,000 93,000 112,000 23,000 16,000 75,000 19,000 |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of Zynex, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Non-controlling Interest | Non-controlling Interest Non-controlling interest in the equity of a subsidiary is accounted for and reported as stockholders’ (deficit) equity. Non-controlling interest represents the 20 |
Reclassifications | Reclassifications Certain reclassifications have been made to the 2016 financial statements to conform to the consolidated 2017 financial statement presentation. These reclassifications had no effect on net earnings or cash flows as previously reported. |
Use of Estimates | Use of Estimates Preparation of financial statements in conformity with U.S. GAAP 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. The most significant management estimates used in the preparation of the accompanying consolidated financial statements are associated with the allowance for billing adjustments and uncollectible accounts receivable, the reserve for obsolete and damaged inventory, the life of its rented equipment, stock-based compensation, and valuation of long-lived assets and realizability of deferred tax assets. |
Revenue Recognition, Allowance for Contractual Adjustments and Collectability | Revenue Recognition, Allowance for Billing Adjustments and Collectability The Company recognizes revenue when each of the following four conditions are met: 1) a contract or sales arrangement exists, 2) products have been shipped and title has transferred, or rental services have been rendered, 3) the price of the products or services is fixed or determinable, and 4) collectability is reasonably assured. The Company recognizes revenue when medical units and supplies are shipped or, for medical units sold from consigned inventory, when it receives notice that the product has been prescribed and delivered to the patient. The Company, prior to recognizing revenue verifies the patient’s insurance coverage or obtains the insurance company preauthorization, when required. Revenue from supplies is recognized upon shipment. Revenue from the rental of products is normally on a month-to-month basis and is recognized ratably over the products’ rental period. Revenue from sales to distributors is recognized when the Company ships its products. Revenue is reported net, after adjustments for estimated insurance company or governmental agency (collectively “Third-party Payors”) reimbursement deductions and, for wholesale customers and patient billings, an allowance for uncollectible accounts. The Third-party Payor reimbursement deductions are known throughout the health care industry as “billing adjustments” whereby the Third-party Payors unilaterally reduce the amount they reimburse for the Company’s products. A significant portion of the Company’s revenues are derived, and the related receivables are due, from Third-party Payors. The nature of these receivables within the medical industry has typically resulted in long collection cycles. The process of determining what products will be reimbursed by Third-party Payors and the amounts that they will reimburse is complex and depends on conditions and procedures that vary among providers and may change from time to time. The Company maintains an allowance for billing adjustments and an allowance for doubtful accounts. Billing adjustments result from reimbursements from Third-party Payors that are less than amounts claimed and from where the amount claimed by the Company exceeds the Third-party Payors usual, customary and reasonable reimbursement rate. The Company determines the amount of the allowance and adjusts it at the end of each reporting period, based on a number of factors, including historical rates of collection, the aging of the receivables, trends in the historical rates of collection and current relationships and experience with the Third-party Payors. If the rates of collection of past-due receivables recorded for previous fiscal periods changes, or if there is a trend in the rates of collection on those receivables, the Company may be required to change the rate at which it provides for additions to the allowance. A change in the rates of the Company’s collections can result from a number of factors, including experience and training of billing personnel, changes in the reimbursement policies or practices of Third-party Payors, or changes in industry rates of reimbursement. We believe we have a sufficient history of collection experience to estimate the net collectible amounts by payor. However, changes to the allowance for billing adjustments and uncollectible accounts, which are recorded in the income statement as a reduction of revenue, have historically fluctuated and may continue to fluctuate significantly from quarter to quarter and year to year. Due to the nature of the medical industry and the reimbursement environment in which the Company operates, estimates are required to record net revenues and accounts receivable at their net realizable values (also known as net collectible value). Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of third-party billing arrangements and the uncertainty of reimbursement amounts for certain products or services from payors or unanticipated requirements to refund payments previously received may result in adjustments to amounts originally recorded. Due to continuing changes in the health care industry and third-party reimbursement, as well as changes in our billing practices to increase cash collections, it is possible that management’s estimates could change in the near term, which could have an impact on our results of operations and cash flows. Any differences between estimated settlements and final determinations are reflected as an increase or a reduction to revenue in the period when such final determinations are known. The Company frequently receives refund requests from insurance providers relating to specific patients and dates of service. Billing and reimbursement disputes are very common in the Company’s industry. These requests are sometimes related to a limited number of patients or products; at other times, they include a significant number of refund claims in a single request. The Company reviews and evaluates these requests and determines if any refund request is appropriate. The Company also reviews these refund claims when it is rebilling or pursuing reimbursement from insurance providers. The Company frequently has significant offsets against such refund requests, and sometimes amounts are due to the Company in excess of the amounts of refunds requested by the insurance providers. Therefore, at the time of receipt of such refund requests, the Company is generally unable to determine if a refund request is valid and should be accrued. Such refunds are accrued when the amount is fixed and determinable. However, no assurances can be given with respect to such estimates of reimbursements and offsets or the ultimate outcome of any refund requests. In addition to the allowance for billing adjustments, the Company records an allowance for uncollectible accounts receivable for wholesale (sales to distributors) sales and certain patient billings. Uncollectible accounts receivable are primarily a result of non-payment from patients who have been direct billed for co-payments or deductibles, lack of appropriate insurance coverage and disallowances of charges by Third-party Payors. If there is a change to a material insurance provider contract or policy, application by a provider, a decline in the economic condition of providers or a significant turnover of Company billing personnel resulting in diminished collection effectiveness, the estimate of the allowance for uncollectible accounts receivable may not be adequate and may result in an increase in the future. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments include cash, accounts receivable, accounts payable and income taxes, for which current carrying amounts approximate fair value due to their short-term nature. Financial instruments also include the line of credit and capitalized leases, the carrying value of which approximates fair value because the interest rates on the outstanding borrowings are at rates that approximate market rates for borrowings with similar terms and average maturities. |
Inventory | Inventory Inventory, which primarily represents finished goods, are valued at the lower of cost (average) or market. The Company monitors inventory for turnover and obsolescence and records losses for excess and obsolete inventory, as appropriate. The Company provides reserves for estimated excess and obsolete inventories equal to the difference between the costs of inventories on hand and the estimated market value based upon assumptions about future demand. If future demand is less favorable than currently projected by management, additional inventory write-downs may be required. |
Segment Reporting, Policy [Policy Text Block] | Segment Information We define operating segments as components of our enterprise for which separate financial information is reviewed regularly by the chief operating decision-makers to evaluate performance and to make operating decisions. We have identified our Chief Executive Officer and Chief Financial Officer as our chief operating decision-makers (“CODM”). We currently operate our business as one operating segment which includes two revenue types: Product devices and Product supplies. Total assets by segment have not been disclosed as the information is not available to the chief operating decision-makers. |
Recent Accounting Pronouncements | In June 2016, FASB issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326) ("ASU 2016-13"), Measurement of Credit Losses on Financial Instruments. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income. The standard will replace today's "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. This ASU is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. We are currently evaluating the impact that the adoption of ASU 2016-13 will have on our financial condition, results of operations and cash flows. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). These amendments require the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases under ASC 840 “Leases”. These amendments also require qualitative disclosures along with specific quantitative disclosures. These amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Entities are required to apply the amendments at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the impact that the adoption of ASU 2016-02 will have on our financial condition, results of operations and cash flows. In May 2014, the FASB issued ASU No. 2014-09“Revenue from Contracts with Customers” (Topic 606) which amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This accounting guidance is effective for the Company beginning in the first quarter of fiscal year 2018, using one of two prescribed retrospective methods. The Company is evaluating the impact of the amended revenue recognition guidance on the Company’s consolidated financial statements. Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a material impact on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Stock Compensation (Topic 718), which includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The standard is effective for annual periods beginning after December 15, 2016. We adopted this ASU during the first quarter 2017. The key effects of the adoption on our financial statements include that the Company will now recognize windfall tax benefits as deferred tax assets instead of tracking the windfall pool and recording such benefits in equity. Additionally, we have elected to recognize forfeitures as they occur rather than estimating them at the time of grant. The adoption of this ASU did not have a material impact on our consolidated financial statements. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment as of June 30, 2017 and December 31, 2016, consist of the following (in thousands): June 30, December 31, Useful (UNAUDITED) Office furniture and equipment $ 911 $ 911 3-7 years Rental inventory 1,456 1,411 5 years Vehicles 76 76 5 years Assembly equipment 125 125 7 years 2,568 2,523 Less accumulated depreciation (2,071) (1,943) $ 497 $ 580 |
EARNING (LOSS) PER SHARE (Table
EARNING (LOSS) PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Calculation of Basic and Diluted Earnings (Loss) Per Share | The calculation of basic and diluted earnings (loss) per share for the three and six months ended June 30, 2017 and 2016 is as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, 2017 2016 2017 2016 Basic income per share: Net income available to common stockholders $ 1,504 $ (227) $ 1,857 $ (672) Basic weighted average shares outstanding 32,048 31,271 31,790 31,271 Basic income per share: $ 0.05 $ (0.01) $ 0.06 $ (0.02) Diluted income per share: Net income available to common stockholders $ 1,504 $ (227) $ 1,857 $ (672) Weighted average shares outstanding 32,048 31,271 31,790 31,271 Effect of dilutive securities - options and restricted stock 1,214 - 623 - Diluted weighted average shares outstanding 33,262 31,271 32,413 31,271 Diluted income per share: $ 0.05 $ (0.01) $ 0.06 $ (0.02) |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Fair Value of Stock Options Grants | The Company used the Black Scholes option pricing model to determine the fair value of stock option grants, using the following assumptions: For the Three Months Ended June 30, For the Six Months Ended June 30, 2017 2016 2017 2016 Expected term (years) 6.25 6.25 6.25 6.25 Risk-free interest rate 1.83 % 1.28 % 1.76 % 1.54 % Expected volatility 122.85 % 122.99 % 125.20 % 122.61 % Expected dividend yield 0.00 % 0.00 % 0.00 % 0.00 % |
Summary of Stock Option Activity Under the Option Plan | Number Weighted Weighted Aggregate Outstanding at December 31, 2016 2,190 $ 0.40 6.73 $ 124 Granted 435 $ 0.32 Exercised Forfeited (741) $ 0.31 Outstanding at June 30, 2017 1,884 $ 0.42 6.53 $ 498 Exercisable at June 30, 2017 1,374 $ 0.45 5.58 $ 356 |
LINE OF CREDIT (Tables)
LINE OF CREDIT (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
LINE OF CREDIT | The Company used the Black Scholes option pricing model to determine the fair value of the stock warrant, using the following assumptions: Contractual term 5.0 years Volatility 122.44 % Risk-free interest rate 1.00 % Dividend yield 1.44 % |
PRIVATE PLACEMENT MEMORANDUM (T
PRIVATE PLACEMENT MEMORANDUM (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Private Placement Memorandum Disclosure [Abstract] | |
Schedule of Cash and Non-Cash Components Of The Private Placement Memorandum [Table Text Block] | The table below summarizes the cash and non-cash components of the private placement memorandum (in thousands): June 30, 2017 Proceeds from unsecured subordinated promissory notes $ 1,035 Less debt issuance costs and discount Payment of commission and placement agent fees and related expenses (155) Non-cash activity Common stock issued to placement agent (255) Obligation to issue common stock to private placement noteholders (255) Amortization of issuance costs and debt discount 148 Unsecured subordinated promissory notes, net of issuance and debt discount 518 Current portion of unsecured subordinated promissory notes (518) Long-term portion of unsecured subordinated promissory notes $ - |
BASIS OF PRESENTATION (Details
BASIS OF PRESENTATION (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||||
Noncontrolling Interest, Ownership Percentage by Parent | 20.00% | 20.00% | |||
Revenue, Net | $ 5,042 | $ 3,286 | $ 8,478 | $ 6,763 | |
North America [Member] | |||||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||||
Percentage Of Revenues | 99.99% | ||||
ZBC [Member] | |||||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||||
Noncontrolling Interest, Ownership Percentage by Parent | 80.00% | 80.00% | |||
Zynex Monitoring Solutions Inc [Member] | |||||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||||
Revenue, Net | $ 0 | $ 0 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | $ 2,568 | $ 2,523 |
Less accumulated depreciation | (2,071) | (1,943) |
Property and Equipment, Net | 497 | 580 |
Office furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | $ 911 | 911 |
Office furniture and equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Useful Life | 7 years | |
Office furniture and equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Useful Life | 3 years | |
Rental inventory | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | $ 1,456 | 1,411 |
Property and Equipment, Useful Life | 5 years | |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | $ 76 | 76 |
Property and Equipment, Useful Life | 5 years | |
Assembly equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | $ 125 | $ 125 |
Property and Equipment, Useful Life | 7 years |
EARNING (LOSS) PER SHARE (Detai
EARNING (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Basic income per share: | ||||
Net income available to common stockholders | $ 1,504 | $ (227) | $ 1,857 | $ (672) |
Basic weighted average shares outstanding | 32,048,000 | 31,271,000 | 31,790,000 | 31,271,000 |
Basic income per share: | $ 0.05 | $ (0.01) | $ 0.06 | $ (0.02) |
Diluted income per share: | ||||
Net income available to common stockholders | $ 1,504 | $ (227) | $ 1,857 | $ (672) |
Weighted average shares outstanding | 32,048,000 | 31,271,000 | 31,790,000 | 31,271,000 |
Effect of dilutive securities - options and restricted stock | 1,214 | 0 | 623 | 0 |
Diluted weighted average shares outstanding | 33,262,000 | 31,271,000 | 32,413,000 | 31,271,000 |
Diluted income per share: | $ 0.05 | $ (0.01) | $ 0.06 | $ (0.02) |
EARNING (LOSS) PER SHARE (Det27
EARNING (LOSS) PER SHARE (Details Textual) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,000,000 | 2,200,000 | 1,100,000 | 2,300,000 |
Weighted Average Number Diluted Shares Outstanding Adjustment, Total | 1,214 | 0 | 623 | 0 |
Common Stock [Member] | Private Placement [Member] | ||||
Weighted Average Number Diluted Shares Outstanding Adjustment, Total | 776,250 | 776,250 |
STOCK-BASED COMPENSATION PLAN28
STOCK-BASED COMPENSATION PLANS (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Fair value of stock option grants | ||||
Expected term (years) | 6 years 3 months | 6 years 3 months | 6 years 3 months | 6 years 3 months |
Risk-free interest rate | 1.83% | 1.28% | 1.76% | 1.54% |
Expected volatility | 122.85% | 122.99% | 125.20% | 122.61% |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
STOCK-BASED COMPENSATION PLAN29
STOCK-BASED COMPENSATION PLANS (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Summary of stock option activity under the option Plan | |||||
Number of Shares, Outstanding at December 31, 2016 | 2,190,000 | ||||
Number of Shares, Granted | 270,000 | 270,000 | 435,000 | 754,000 | |
Number of Shares, Exercised | 0 | ||||
Number of Shares, Forfeited | (741,000) | ||||
Number of Shares, Outstanding at June 30, 2017 | 1,884,000 | 1,884,000 | 2,190,000 | ||
Number of Shares, Exercisable at June 30, 2017 | 1,374,000 | 1,374,000 | |||
Weighted Average Exercise Price, Outstanding at December 31, 2016 | $ 0.4 | ||||
Weighted Average Exercise Price, Granted | $ 0.39 | $ 0.32 | 0.32 | $ 0.27 | |
Weighted Average Exercise Price, Exercised | 0 | ||||
Weighted Average Exercise Price, Forfeited | 0.31 | ||||
Weighted Average Exercise Price, Outstanding at June 30, 2017 | 0.42 | 0.42 | $ 0.4 | ||
Weighted Average Exercise Price, Exercisable at June 30, 2017 | $ 0.45 | $ 0.45 | |||
Weighted Average Remaining Contractual Life, Outstanding at June 30, 2017 | 6 years 6 months 11 days | 6 years 8 months 23 days | |||
Weighted Average Remaining Contractual Life, Exercisable at June 30, 2017 | 5 years 6 months 29 days | ||||
Aggregate Intrinsic Value, Outstanding at June 30, 2017 | $ 498 | $ 498 | $ 124 | ||
Aggregate Intrinsic Value, Exercisable at June 30, 2017 | $ 356 | $ 356 |
STOCK-BASED COMPENSATION PLAN30
STOCK-BASED COMPENSATION PLANS (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares under option, granted | 270,000 | 270,000 | 435,000 | 754,000 |
Weighted average exercise price, granted | $ 0.39 | $ 0.32 | $ 0.32 | $ 0.27 |
Unrecognized compensation expense related to stock options | $ 87,000 | $ 87,000 | ||
Weighted-average period of unrecognized compensation expense related to stock options | 3 years 5 months 1 day | |||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Date | Dec. 31, 2014 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 0.34 | $ 0.27 | $ 0.32 | $ 0.35 |
Management [Member] | Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 10,000 | 10,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 4 years | 4 years | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | 0 | 0 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | 0 | 0 | ||
Selling, General And Administrative Expenses | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Allocated Share-based Compensation Expense | $ 13,000 | $ 16,000 | $ 37,000 | $ 159,000 |
2005 Stock Option Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 3,000,000 | 3,000,000 | ||
Stock Incentive Plan 2017 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 5,000,000 | 5,000,000 | ||
Shares under option, granted | 210,000 |
INCOME TAXES (Details Textual)
INCOME TAXES (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Taxes [Line Items] | ||||
Income taxes paid (including interest and penalties) | $ 0 | $ 0 | $ 0 | $ 0 |
Effective Income Tax Rate Reconciliation, Percent | 2.00% | 2.00% | ||
Income Tax Expense (Benefit) | $ 36 | $ 0 | $ 45 | $ 0 |
LINE OF CREDIT (Details)
LINE OF CREDIT (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Contractual term | 6 years 3 months | 6 years 3 months | 6 years 3 months | 6 years 3 months |
Volatility | 122.85% | 122.99% | 125.20% | 122.61% |
Risk-free interest rate | 1.83% | 1.28% | 1.76% | 1.54% |
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Warrant [Member] | ||||
Contractual term | 5 years | |||
Volatility | 122.44% | |||
Risk-free interest rate | 1.00% | |||
Dividend yield | 1.44% |
LINE OF CREDIT (Details Textual
LINE OF CREDIT (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Mar. 28, 2017 | Mar. 31, 2016 | Jun. 30, 2017 | Dec. 31, 2016 | |
Line of Credit Facility [Abstract] | ||||
Line of Credit, Current | $ 0 | $ 2,771 | ||
Date of Maturity | Dec. 19, 2014 | |||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 50,000 | |||
Class Of Stock Warrants Or Rights Warrants Issuance Cost | $ 15,000 | |||
Revolving Credit Facility | ||||
Line of Credit Facility [Abstract] | ||||
Line of Credit, Current | $ 0 | |||
Effective interest rate under the Credit Agreement | 11.00% | |||
Interest Rate | 6.75% | |||
Additional default interest rate | 3.00% | |||
Fees include in effective interest rate under the credit agreement | 1.25% | |||
Revolving Credit Facility | Maximum | ||||
Line of Credit Facility [Abstract] | ||||
Aggregate periodic cap payment suspended | $ 250,000 |
PRIVATE PLACEMENT MEMORANDUM (D
PRIVATE PLACEMENT MEMORANDUM (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Proceeds from unsecured subordinated promissory notes | $ 1,035 | $ 0 | |
Less debt issuance costs and discount Payment of commission and placement agent fees and related expenses | (155) | $ 0 | |
Non-cash activity | |||
Common stock issued to placement agent | (255) | ||
Obligation to issue common stock to private placement noteholders | (255) | ||
Amortization of issuance costs and debt discount | 148 | ||
Unsecured subordinated promissory notes, net of issuance and debt discount | 518 | ||
Current portion of unsecured subordinated promissory notes | (518) | $ 0 | |
Long-term portion of unsecured subordinated promissory notes | $ 0 |
PRIVATE PLACEMENT MEMORANDUM 35
PRIVATE PLACEMENT MEMORANDUM (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Feb. 28, 2017 | Jun. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Nov. 30, 2016 | |
Notes Payable, Noncurrent | $ 466 | $ 466 | $ 0 | ||
Amortization of Debt Issuance Costs and Discounts | 148 | ||||
Newbridge Securities Corporation [Member] | |||||
Non Accountable Expense Allowance | $ 155 | ||||
Commission And Fees To Placement Agent | $ 255 | ||||
Stock to be Issued For Services | 776,250 | ||||
Stock Issued During Period, Shares, Issued for Services | 776,250 | ||||
Notes Payable, Noncurrent | $ 255 | ||||
Repayments of Unsecured Debt | $ 342 | ||||
Amortization of Debt Issuance Costs and Discounts | 111 | 148 | |||
Percentage Of Commissions In Cash | 10.00% | ||||
Non Accountable Expense Allowance Percentage | 3.00% | ||||
Increase In Value of Shares To Be Issued | $ 211 | $ 211 | |||
Newbridge Securities Corporation [Member] | Unsecured Debt [Member] | |||||
Funds Available For Repayment Of Note,Percentage | 5.00% | ||||
Debt Instrument, Face Amount | $ 1,035 | ||||
Debt Instrument, Maturity Date | Jun. 28, 2018 | ||||
Newbridge Securities Corporation [Member] | Unsecured Debt [Member] | Minimum [Member] | |||||
Debt Instrument, Face Amount | $ 1,000 | ||||
Newbridge Securities Corporation [Member] | Unsecured Debt [Member] | Maximum [Member] | |||||
Debt Instrument, Face Amount | $ 1,500 |
DEFERRED INSURANCE REIMBURSEM36
DEFERRED INSURANCE REIMBURSEMENT (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2016 | Jul. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Proceeds from Insurance Settlement, Operating Activities | $ 880 | |||
Liability for Claims and Claims Adjustment Expense, Total | $ 880 | $ 880 | $ 880 |
CAPITAL LEASES AND OTHER OBLI37
CAPITAL LEASES AND OTHER OBLIGATIONS (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | ||
Dec. 31, 2016 | Jul. 31, 2016 | Jun. 30, 2017 | Mar. 31, 2017 | |
Debt Instrument [Line Items] | ||||
Lease termination date | Dec. 31, 2018 | |||
Lease Termination Agreement And New Lease Agreement | ||||
Debt Instrument [Line Items] | ||||
Fixed rental payments for each month | $ 38 | $ 49 | ||
Maximum | ||||
Debt Instrument [Line Items] | ||||
Imputed interest rate on lease | 10.00% | |||
Minimum | ||||
Debt Instrument [Line Items] | ||||
Imputed interest rate on lease | 5.00% | |||
Assembly Equipment | ||||
Debt Instrument [Line Items] | ||||
Cost of assets under capital lease | $ 461 | |||
Accumulated depreciation | $ 333 |
CONCENTRATIONS (Details Textual
CONCENTRATIONS (Details Textual) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Dec. 31, 2016 | |
Minimum [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration Risk, Percentage | 45.00% | |||
Supplier Concentration Risk [Member] | Minimum [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration Risk, Percentage | 10.00% | |||
Net Accounts Receivable | ||||
Concentration Risk [Line Items] | ||||
Concentration Risk, Percentage | 14.00% | 10.00% | ||
One Vendor [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration Risk, Percentage | 35.00% | 40.00% | ||
Two Vendor [Member] | Supplier Concentration Risk [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration Risk, Percentage | 45.00% | |||
Three Vendor [Member] | Supplier Concentration Risk [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration Risk, Percentage | 65.00% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2015 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | ||||||
Compensation paid | $ 41 | $ 33 | $ 83 | $ 60 | ||
Employment Arrangement | ||||||
Related Party Transaction [Line Items] | ||||||
Net payable to related party included in accrued liabilities | 93,000 | 93,000 | $ 112,000 | |||
Repayments of Related Party Debt | 16,000 | 19,000 | ||||
Employment Arrangement | Immediate Family Members of Management or Principal Owner | ||||||
Related Party Transaction [Line Items] | ||||||
Lump sum payment | $ 100,000 | |||||
Agreement term | 3 years | |||||
Thomas Sandgaard [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Net payable to related party included in accrued liabilities | 0 | 0 | $ 75,000 | |||
Repayments of Related Party Debt | $ 23,000 | $ 75,000 |