Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 26, 2014 | Jun. 28, 2013 | |
Document Document And Entity Information [Line Items] | ' | ' | ' |
Entity Registrant Name | 'ZYNEX INC | ' | ' |
Entity Central Index Key | '0000846475 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $5,722,234 |
Entity Common Stock, Shares Outstanding | ' | 31,171,234 | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current Assets: | ' | ' |
Cash | $323 | $823 |
Accounts receivable, net | 7,033 | 12,224 |
Inventory, net | 5,002 | 6,160 |
Prepaid expenses | 346 | 243 |
Deferred tax assets, net | 72 | 1,855 |
Income tax receivable | 893 | ' |
Other current assets | 35 | 57 |
Total current assets | 13,704 | 21,362 |
Property and equipment, net | 2,891 | 3,705 |
Deposits | 400 | 171 |
Deferred financing fees, net | 48 | 98 |
Intangible assets, net | 178 | 349 |
Goodwill | ' | 251 |
Total assets | 17,221 | 25,936 |
Current Liabilities: | ' | ' |
Line of credit | 5,820 | 5,906 |
Current portion of notes payable and other obligations | 92 | 144 |
Accounts payable | 2,743 | 2,057 |
Income taxes payable | 96 | 1,430 |
Accrued payroll and payroll taxes | 607 | 899 |
Deferred rent | ' | 371 |
Current portion of contingent consideration | 7 | 21 |
Other accrued liabilities | 319 | 1,265 |
Total current liabilities | 9,684 | 12,093 |
Notes payable and other obligations, less current portion | 150 | 114 |
Deferred rent | 2,454 | 785 |
Deferred tax liabilities, net | 72 | 786 |
Warranty liability | 13 | 20 |
Contingent consideration, less current portion | ' | 83 |
Total liabilities | 12,373 | 13,881 |
Stockholders’ Equity: | ' | ' |
Preferred stock; $.001 par value, 10,000,000 shares authorized, no shares issued or outstanding | ' | ' |
Common stock, $.001 par value, 100,000,000 shares authorized, 31,171,234 (2013) and 31,148,234 (2012) shares issued and outstanding | 31 | 31 |
Paid-in capital | 5,586 | 5,453 |
Retained (deficit) earnings | -735 | 6,566 |
Total Zynex, Inc. stockholders’ equity | 4,882 | 12,050 |
Noncontrolling interest | -34 | 5 |
Total Stockholders’ equity | 4,848 | 12,055 |
Total liabilities and stockholders' equity | $17,221 | $25,936 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ' | ' |
Preferred stock, shares outstanding | ' | ' |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 31,171,234 | 31,148,234 |
Common stock, shares outstanding | 31,171,234 | 31,148,234 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Net revenue: | ' | ' |
Rental | $5,270 | $8,917 |
Sales | 16,414 | 30,749 |
Total net revenue | 21,684 | 39,666 |
Cost of revenue: | ' | ' |
Rental | 1,373 | 1,283 |
Sales | 6,767 | 7,487 |
Total cost of revenue | 8,140 | 8,770 |
Gross profit | 13,544 | 30,896 |
Selling, general and administrative expense | 21,144 | 28,159 |
(Loss) income from operations | -7,600 | 2,737 |
Other income (expense): | ' | ' |
Interest expense | -607 | -435 |
Other income | 77 | 34 |
Total other income (expense) | -530 | -401 |
(Loss) income before income taxes | -8,130 | 2,336 |
Income tax benefit (expense) | 790 | -788 |
Net (loss) income | -7,340 | 1,548 |
Plus: Net loss – noncontrolling interest | 39 | 5 |
Net (loss) income – attributable to Zynex, Inc. | ($7,301) | $1,553 |
Net (loss) income per share – attributable to Zynex, Inc.: | ' | ' |
Basic | ($0.23) | $0.05 |
Diluted | ($0.23) | $0.05 |
Weighted average number of common shares outstanding: | ' | ' |
Basic | 31,152,015 | 31,062,428 |
Diluted | 31,152,015 | 31,222,126 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows from operating activities: | ' | ' |
Net (loss) income | ($7,340) | $1,548 |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ' | ' |
Depreciation expense | 708 | 831 |
Change in the value of contingent consideration | -94 | -31 |
Provision for losses on accounts receivable | 469 | 485 |
Amortization of intangible assets | 131 | 81 |
Impairment of intangible assets | 160 | ' |
Impairment of goodwill | 251 | ' |
Amortization of financing fees | 50 | 50 |
Issuance of common stock for services | ' | 20 |
Provision for obsolete inventory | 97 | 573 |
Write-off of field inventory | 1,340 | ' |
Deferred rent | 1,299 | -296 |
Employee stock-based compensation expense | 133 | 166 |
Deferred tax expense (benefit) | 1,069 | -168 |
Changes in operating assets and liabilities, net of business acquisitions (2012): | ' | ' |
Accounts receivable | 4,722 | -1,725 |
Inventory | -279 | -2,070 |
Prepaid expenses | -103 | 50 |
Income tax receivable | -893 | ' |
Deposits and other current assets | -207 | -12 |
Accounts payable | 686 | -132 |
Accrued liabilities | -1,247 | -112 |
Income taxes payable | -1,334 | -137 |
Net cash used in operating activities | -382 | -879 |
Cash flows from investing activities: | ' | ' |
Purchases of equipment and inventory used for rental | -644 | -756 |
Change in inventory used for rental | 764 | -565 |
Payments on contingent consideration | -3 | ' |
Cash paid for domain name | ' | -18 |
Cash paid for acquisition of NeuroDyne | ' | -245 |
Net cash provided by (used in) investing activities | 117 | -1,584 |
Cash flows from financing activities: | ' | ' |
Net borrowings on line of credit | -86 | 2,617 |
Deferred financing fees | ' | -2 |
Payments on notes payable and capital lease obligations | -149 | -131 |
Issuance of common stock | ' | 13 |
Net cash (used in) provided by financing activities | -235 | 2,497 |
Net (decrease) increase in cash | -500 | 34 |
Cash at the beginning of the period | 823 | 789 |
Cash at the end of the period | 323 | 823 |
Supplemental cash flow information: | ' | ' |
Interest paid | 561 | 352 |
Income taxes paid (including interest and penalties) | 399 | 1,127 |
Supplemental disclosure of non-cash investing and financing activities: | ' | ' |
Equipment acquired through note payable and capital lease | 137 | ' |
Common stock issuances for business acquisition | ' | 158 |
Increase in contingent consideration for business acquisition | ' | 135 |
Contribution of property and equipment by noncontrolling interest | ' | $10 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (USD $) | Total | Common Stock | Paid-in Capital | Retained Earnings (Deficit) | Noncontrolling Interest |
In Thousands, except Share data | |||||
Balance at Dec. 31, 2011 | $10,140 | $31 | $5,096 | $5,013 | ' |
Balance, shares at Dec. 31, 2011 | ' | 30,816,631 | ' | ' | ' |
Issuance of common stock for business acquisition | 158 | ' | 158 | ' | ' |
Issuance of common stock for business acquisition, shares | ' | 266,478 | ' | ' | ' |
Issuance of common stock for option exercise | 13 | ' | 13 | ' | ' |
Issuance of common stock for option exercise, shares | 34,500 | 34,500 | ' | ' | ' |
Issuance of common stock for cashless warrant exercise, shares | 5,625 | 5,625 | ' | ' | ' |
Issuance of common stock for consulting services | 20 | ' | 20 | ' | ' |
Issuance of common stock for consulting services, shares | 25,000 | 25,000 | ' | ' | ' |
Employee stock-based compensation expense | 166 | ' | 166 | ' | ' |
Issuance of noncontrolling interest in ZBC (Note2) | 10 | ' | ' | ' | 10 |
Net income (loss) | 1,548 | ' | ' | 1,553 | -5 |
Balance at Dec. 31, 2012 | 12,055 | 31 | 5,453 | 6,566 | 5 |
Balance, shares at Dec. 31, 2012 | 31,148,234 | 31,148,234 | ' | ' | ' |
Issuance of common stock for option exercise, shares | 23,000 | 23,000 | ' | ' | ' |
Employee stock-based compensation expense | 133 | ' | 133 | ' | ' |
Net income (loss) | -7,340 | ' | ' | -7,301 | -39 |
Balance at Dec. 31, 2013 | $4,848 | $31 | $5,586 | ($735) | ($34) |
Balance, shares at Dec. 31, 2013 | 31,171,234 | 31,171,234 | ' | ' | ' |
Organization_Nature_of_Busines
Organization, Nature of Business and Management's Plans | 12 Months Ended |
Dec. 31, 2013 | |
Organization, Nature of Business and Management's Plans | ' |
(1) ORGANIZATION, NATURE OF BUSINESS AND MANAGEMENT’S PLANS | |
ORGANIZATION | |
Zynex, Inc. (a Nevada corporation) and its subsidiaries, Zynex Medical, Inc. (ZMI) (a Colorado corporation, wholly-owned), Zynex NeuroDiagnostics, Inc. (ZND) (a Colorado corporation, wholly-owned), Zynex Monitoring Solutions Inc. (ZMS) (a Colorado corporation, wholly-owned), Zynex Billing and Consulting, LLC (ZBC) (a Colorado limited liability company, 80% majority-owned) and Zynex Europe, ApS (ZEU) (a Denmark corporation, wholly-owned), are collectively referred to as the “Company”. The Company’s headquarters are located in Lone Tree, Colorado. | |
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. ZND was formed to market, through product development and acquisitions, electromyography (“EMG”), electroencephalography (“EEG”), sleep pattern, auditory and nerve conductivity neurological diagnosis devices to hospitals and clinics worldwide, through the utilization of existing ZMI diagnostic EMG technology. During 2013 and 2012, the primary activities within ZND were product development and sales and marketing. ZND did not produce significant revenue during 2013 or 2012. ZMS was formed to develop and market medical devices for non-invasive cardiac monitoring. ZMS did not produce any revenue during 2013 or 2012. ZEU was formed in 2012 to conduct international sales and marketing for Company products. ZEU did not produce significant revenue in 2013. ZBC was formed in 2012 to provide medical billing and consulting services. ZBC did not produce significant revenue in 2013 or 2012. | |
In 2013 and 2012, the Company generated substantially all of its revenue in North America from sales and rentals of its products to patients, dealers and health care providers. | |
MANAGEMENT’S PLANS | |
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. For the years ended December 31, 2013 and 2012, the Company reported negative cash flows from operations of $382 and $879, respectively. In addition, the Company reported a net loss of $7,301 for the year ended December 31, 2013 These factors raise substantial doubt about the Company’s ability to continue as a going concern. 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 to continue as a going concern. The Company developed its operating plans for 2013 to emphasize cash flow, under which we made operational billing changes to increase cash collections and implemented various cost modifications to reduce expenses. However, during 2013, the Company encountered industry challenges related to health care reform, including the Affordable Care Act and coverage and reimbursement changes from government and third-party payors, which has caused uncertainty to exist at the medical practitioner level causing a delay and decline in demand for the Company’s ZMI electrotherapy products. In an effort to minimize the impact of health care reform and changes in reimbursement, the Company has made reductions in its fixed expenses by cutting its annual employee costs by approximately $4,200 through headcount reductions. These headcount reductions were executed during the second and third quarters of 2013. The Company also renegotiated its existing building lease, under which, among other things, base rent has been lowered and the Company is now operating in an approximate twelve month free rent period, which began May 1, 2013, and is expected to result in cash savings of approximately $1,500 through April 30, 2014. The Company is monitoring the demand for its ZMI electrotherapy products and will make additional expense adjustments as necessary in future periods. Additionally, the Company recently added new products that are less impacted by insurance reimbursement to its ZMI sales channel and is pursuing other opportunities, including the compound and sale of topical and transdermal pain creams. In ZND, the Company is distributing EEG sleep diagnostic products, mobile sleep diagnostic products and a sleep apnea treatment device in the US, which are all capital goods that are not subject to insurance reimbursement. The Company is also investing in its ZBC division where increased service based revenue is expected going forward. The Company believes these actions will serve to diversify its product mix and further reduce dependency on insurance reimbursement. | |
(1) ORGANIZATION, NATURE OF BUSINESS AND MANAGEMENT’S PLANS (continued) | |
The Company believes that as a result of the restructuring activities completed during the latter part of 2013, the Company’s cash flows from operating activities and limited borrowing availability under the line of credit will be sufficient to fund cash requirements through the next twelve months. The Company’s line of credit decreased from $5,906 at December 31, 2012 to $5,820 at December 31, 2013, primarily driven by expense reductions made during the latter part of 2013. Maximum borrowings under the line of credit are $7,000, with $54 available to borrow as of March 20, 2014 , subject to adjustments to the Company’s accounts receivable borrowing base. As of December 31, 2013, the Company was in default of two financial covenants under its line of credit. The Company received a waiver for one of the financial covenant defaults and is currently in discussions with the lender and expects to receive an additional waiver; however, no assurance can be given. If a waiver is not obtained, in addition to demanding immediate payment of amounts outstanding under the line of credit, the lender can restrict or prevent the Company from borrowing while in default, which could have a material adverse impact the Company’s cash flow and liquidity. The Company’s long-term business plan contemplates organic growth in revenues, through the addition of new products to its sales channel that could mitigate the decline in the ZMI electrotherapy products, and through possible acquisitions. Management believes that its cash flow projections for 2014 are achievable and that sufficient cash will be generated to meet the Company’s operating and financial obligations for the remainder of 2014. However, there is no guarantee that the Company will be able to meet the requirements of its 2014 budget and limit its use of cash. |
Significant_Accounting_Policie
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2013 | |
Significant Accounting Policies | ' |
(2) SIGNIFICANT ACCOUNTING POLICIES | |
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. | |
NONCONTROLLING INTEREST | |
Noncontrolling interest in the equity of a subsidiary is accounted for and reported as equity. Noncontrolling interest represents the 20% ownership in the Company’s majority-owned subsidiary, ZBC. In 2012, the noncontrolling interest member contributed $10 of property and equipment to ZBC. | |
USE OF ESTIMATES | |
Preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (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 contractual adjustments and uncollectible accounts receivable, the reserve for obsolete and damaged inventory, stock-based compensation, valuation of goodwill and other long-lived assets, and income taxes. | |
REVENUE RECOGNITION AND ALLOWANCES FOR PROVIDER DISCOUNTS 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. Accordingly, the Company recognizes revenue, both rental and sales, when products have been delivered to the patient and the patient’s insurance (if the patient has insurance) has been verified. For medical products that are sold from inventories consigned at clinic locations, the Company recognizes revenue when it receives notice that the product has been prescribed and delivered to the patient and the patient’s insurance coverage has been verified or preauthorization has been obtained from the insurance company, when required. 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, which fulfills its order and transfers title. Revenue is reported net, after adjustments for estimated insurance company or governmental agency (collectively “Third-party Payors”) reimbursement deductions. The deductions are known throughout the health care industry as “contractual adjustments” whereby the Third-party Payors unilaterally reduce the amount they reimburse for the Company’s products. | |
(2) SIGNIFICANT ACCOUNTING POLICIES (continued) | |
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 this 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 contractual adjustments and records additions to the allowance to account for the risk of nonpayment. Contractual adjustments result from reimbursements from Third-party Payors that are less than amounts claimed or 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. Accordingly, changes to the allowance for contractual adjustments, 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. | |
Due to the nature of the 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. 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 an 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 that insurance provider. 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. | |
As of December 31, 2013, the Company believes it has an adequate allowance for contractual adjustments relating to all known insurance disputes and refund requests. 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 contractual adjustments, the Company records an allowance for uncollectible accounts receivable. 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. | |
At December 31, 2013 and 2012, the allowance for uncollectible accounts receivable is $1,837. | |
(2) SIGNIFICANT ACCOUNTING POLICIES (continued) | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
The Company’s financial instruments at December 31, 2013 include cash, accounts receivable and accounts payable, for which current carrying amounts approximate fair value due to their short-term nature. Financial instruments at December 31, 2013 also include the line of credit and notes payable, 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 | |
Inventories, which primarily represent finished goods, are valued at the lower of cost (average) or market. Finished goods include products held at the Company’s headquarters and at different locations by health care providers or other third parties for rental or sale to patients. Total (gross) inventories at December 31, 2013 included $5,120 of finished goods, $310 of parts and $850 of supplies. Total (gross) inventories at December 31, 2012 included $6,042 of finished goods, $533 of parts and $766 of supplies. | |
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. To fulfill orders faster, the Company places a large amount of its inventory with field sales representatives. This increases the sensitivity of these products to obsolescence reserve estimates. As this inventory is not in the Company’s possession, management maintains additional reserves for estimated shrinkage of these inventories based on the Company’s aging. At December 31, 2013 and 2012, the Company had an allowance for obsolete and damaged inventory of approximately $1,278 and $1,181 respectively. In addition, during the year ended December 31, 2013, the Company wrote off a portion of its field inventory totaling approximately $1,340, as a result of changes in industry conditions driven primarily by health care reform. These changes caused a reduction in the Company’s field sales force which negatively impacted its field inventory. | |
The Company had $1,000 of open purchase commitments at December 31, 2013. | |
PROPERTY AND EQUIPMENT | |
Property and equipment are stated at cost. Products on rental contracts are placed in property and equipment and depreciated over their estimated useful life. The Company removes the cost and the related accumulated depreciation from the accounts of assets sold or retired, and the resulting gains or losses are included in the results of operations. Depreciation is computed using the straight-line method. As rental inventory contributes directly to the revenue generating process, the Company classifies the depreciation of rental inventory to cost of revenue. | |
Repairs and maintenance costs are charged to expense as incurred. | |
SHIPPING COSTS | |
Shipping costs are included in cost of sales and rentals. | |
GOODWILL AND INTANGIBLE ASSETS | |
Goodwill represents the excess of the purchase price over the fair value of the net assets of the business acquired. Authoritative guidance requires that goodwill be assessed for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment assessment requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgments are required to estimate the fair value of a reporting unit including estimating future cash flows, determining appropriate discount rates and other assumptions. When conducting its goodwill impairment assessment, the Company initially performs a qualitative evaluation to determine if it is more likely than not that the fair value of its reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a two-step goodwill impairment test. | |
(2) SIGNIFICANT ACCOUNTING POLICIES (continued) | |
The Company determined, based on its qualitative evaluation, that it was necessary to perform the two-step goodwill impairment test during the second and fourth quarters of 2013, primarily because of the significant decline in sales in its ZMI electrotherapy products. In March 2012, the Company acquired substantially all of the assets and business of NeuroDyne Medical Corp. (NeuroDyne). The Company modified its business forecast for NeuroDyne during 2013, resulting in reduced estimated sales and cash flow, as compared to the original business forecast at the time of the acquisition. Management therefore performed the two-step goodwill impairment test and determined that goodwill related to NeuroDyne was impaired and recorded a $251 goodwill impairment charge during the year ended December 31, 2013. | |
Intangible assets with estimable lives are amortized in a pattern consistent with the asset’s identifiable cash flows or using a straight- line method over their remaining estimated benefit periods if the pattern of cash flows is not estimable. The Company reviews the carrying value of intangible and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparison of their carrying amounts to the undiscounted cash flows that the asset or asset group is expected to generate. If the carrying amount of the assets exceeds the undiscounted cash flows the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. The Company’s intangible assets include assets acquired in the acquisition of NeuroDyne. The Company modified its business forecast for NeuroDyne during 2013, resulting in reduced estimated sales and cash flow, as compared to the original business forecast at the time of the acquisition. Therefore, the Company recorded an impairment charge of $160 during the year ended December 31, 2013 related to the NeuroDyne intangible assets. The Company utilized a discounted cash flow (DCF) model to determine fair value for both goodwill and intangible assets as of December 31, 2013. | |
CAPITALIZED SOFTWARE DEVELOPMENT COSTS | |
The Company capitalizes software development costs incurred during the application development stage related to new software or major enhancements to the functionality of existing software that is developed solely to meet the entity’s internal operational needs and when no substantive plans exist or are being developed to market the software externally. Costs capitalized include external direct costs of materials and services and internal payroll and payroll-related costs. Any costs during the preliminary project stage or related to training or maintenance are expensed as incurred. Capitalization ceases when the software project is substantially complete and ready for its intended use. The capitalization and ongoing assessment of recoverability of development costs requires considerable judgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility, and estimated economic life. When the projects are ready for their intended use, the Company amortizes such costs over their estimated useful lives of five years. | |
STOCK-BASED COMPENSATION | |
The Company accounts for stock-based compensation through recognition of the cost of employee services received in exchange for an award of equity instruments, which is measured based on the grant date fair value of the award that is ultimately expected to vest during the period. The stock-based compensation expense is generally recognized over the period during which an employee is required to provide service in exchange for the award (the requisite service period, which in the Company’s case is the same as the vesting period). For awards subject to the achievement of performance metrics, stock based compensation expense is recognized when it becomes probable that the performance condition will be achieved. | |
ADVERTISING | |
The Company expenses advertising costs as they are incurred. Advertising expense for the years ended December 31, 2013 and 2012 was approximately $115 and $95, respectively. | |
RESEARCH AND DEVELOPMENT | |
Research and development costs are expensed when incurred. Research and development expense for the years ended December 31, 2013 and 2012 was approximately $754 and $874, respectively. Research and development costs as well as salaries related to research and development are included in selling, general and administrative expenses. | |
(2) SIGNIFICANT ACCOUNTING POLICIES (continued) | |
INCOME TAXES | |
The provision for income taxes includes taxes payable or refundable for the current period and the deferred tax consequences of transactions that have been recognized in the Company’s consolidated financial statements or income tax returns. Temporary differences result primarily from basis differences in property and equipment, accounts receivable, inventory and deferred rent. The carrying value of deferred tax assets is determined based on an evaluation of whether the Company is more likely than not to realize the assets. A valuation allowance is established, when considered necessary, to reduce deferred tax assets to the amounts expected to be realized. | |
The Company accounts for uncertain tax positions in accordance with the accounting standard related to income taxes. The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. As of December 31, 2013 and 2012, the Company had accrued unrecognized tax benefits, penalties and interest of $194 and $67, respectively. The Company files income tax returns in the U.S. and various state jurisdictions, and there are open statutes of limitations for taxing authorities to audit our tax returns from 2010 through the current period. | |
FOREIGN CURRENCY TRANSACTIONS | |
Foreign currency transaction gains and losses are included in other income (expense) in the accompanying consolidated statements of operations. Foreign currency transaction gains for the years ended December 31, 2013 and 2012 were insignificant. | |
RECLASSIFICATIONS | |
Certain reclassifications have been made to the prior years’ consolidated financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations. | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11 “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” Under ASU 2013-11, an entity is required to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. If a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this guidance affects presentation only and, therefore, it is not expected to have a material impact on the Company's financial condition, results of operations or cash flows. | |
Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have an impact on the Company’s consolidated financial statements. |
Property_and_Equipment
Property and Equipment | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Property and Equipment | ' | ||||||||||||
(3) PROPERTY AND EQUIPMENT | |||||||||||||
Cost, accumulated depreciation, and the related estimated useful lives of property and equipment as of December 31, 2013 and 2012 are as follows: | |||||||||||||
2013 | 2012 | Useful lives | |||||||||||
Office furniture and equipment | $ | 2,073 | $ | 1,631 | 3-7 years | ||||||||
Rental inventory | 2,142 | 3,147 | 5 years | ||||||||||
Vehicles | 76 | 76 | 5 years | ||||||||||
Leasehold improvements | 486 | 375 | 2-6 years | ||||||||||
Assembly equipment | 171 | 168 | 7 years | ||||||||||
4,948 | 5,397 | ||||||||||||
Less accumulated depreciation | (2,057 | ) | (1,692 | ) | |||||||||
$ | 2,891 | $ | 3,705 | ||||||||||
Depreciation expense recorded on property and equipment was $708 and $831 for 2013 and 2012, respectively. |
Intangible_Assets
Intangible Assets | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Intangible Assets | ' | ||||||||
(4) INTANGIBLE ASSETS | |||||||||
At December 31, 2013 and 2012, intangible assets consist of the following | |||||||||
Amortization | 2013 | 2012 | |||||||
Life Years | |||||||||
Software and development costs | 5 | $ | 325 | $ | 205 | ||||
Trade names | 5 | - | 72 | ||||||
Non-compete agreement | 5 | - | 26 | ||||||
Technology | 5 | - | 135 | ||||||
Domain name | 1 | - | 18 | ||||||
Total intangible assets, gross | 325 | 456 | |||||||
Less: accumulated amortization | (147 | ) | (107 | ) | |||||
Total intangible assets, net | $ | 178 | $ | 349 | |||||
Amortization expense totaled $131 for 2013 and $81 for 2012, respectively. | |||||||||
Earnings_Loss_Per_Share
Earnings (Loss) Per Share | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Earnings (Loss) Per Share | ' | ||||||||
(5) EARNINGS (LOSS) PER SHARE | |||||||||
Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (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 if-converted and treasury-stock methods. | |||||||||
The calculation of basic and diluted earnings per share for 2013 and 2012 is as follows: | |||||||||
2013 | 2012 | ||||||||
BASIC | |||||||||
Net(loss) income attributable to common stockholders | $ | (7,301 | ) | $ | 1,553 | ||||
Weighted average shares outstanding—basic | 31,152,015 | 31,062,428 | |||||||
Net (loss) income per share—basic | $ | (0.23 | ) | $ | 0.05 | ||||
DILUTED | |||||||||
Net (loss) income attributable to common stockholders | $ | (7,301 | ) | $ | 1,553 | ||||
Weighted average shares outstanding—basic | 31,152,015 | 31,062,428 | |||||||
Dilutive securities | — | 159,698 | |||||||
Weighted average shares outstanding, diluted | 31,152,015 | 31,222,126 | |||||||
Net (loss) income per share, diluted | $ | (0.23 | ) | $ | 0.05 | ||||
The effects of potential common stock equivalents, related to outstanding options for the year ended December 31, 2013 totaling 2,472,205 have not been included in the computation of diluted net loss per share because the impact of the potential shares would decrease the loss per share. | |||||||||
Potential common share equivalents as of December 31, 2012 of 906,500 related to certain outstanding stock options, were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, as the option exercise prices exceeded the average market price of the Company’s common stock. The effect of these shares, if any, on the diluted earnings per share calculation may vary significantly depending on fluctuations in the stock price. | |||||||||
StockBased_Compensation_Plans
Stock-Based Compensation Plans | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Stock-Based Compensation Plans | ' | ||||||||||||||||
(6) STOCK-BASED COMPENSATION PLANS | |||||||||||||||||
The Company has a 2005 Stock Option Plan (the “Option Plan”) and has reserved 3,000,000 shares of common stock for issuance under the Option Plan. Vesting terms are determined by the Board of Directors. All stock options under the Option Plan expire no later than ten years from the date of grant. | |||||||||||||||||
For the years ended December 31, 2013 and 2012, the Company recorded compensation expense related to stock options of $133 and $166, respectively. Stock-based compensation recorded in the accompanying consolidated statements of operations for the years ended December 31, 2013 and 2012 included $11 and $20, respectively, in cost of goods sold and $122 and $146, respectively, in selling, general and administrative expenses. | |||||||||||||||||
For the year ended December 31, 2013, the Company granted options to purchase up to 1,424,216 shares of common stock to employees at exercise prices that ranged from $0.22 to $0.48 per share. During the year ended December 31, 2012, the Company granted options to purchase up to 322,500 shares of common stock at exercise prices that ranged from $0.70 to $0.81 per share. | |||||||||||||||||
The Company used the Black Scholes option pricing model to determine the fair value of stock option grants, using the following assumptions during the years ended December 31, 2013 and 2012: | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Weighted average expected term | 6.25 years | 6.25 years | |||||||||||||||
Weighted average volatility | 111 | % | 134 | % | |||||||||||||
Weighted average risk-free interest rate | 1.54 | % | 0.8 | % | |||||||||||||
Dividend yield | 0 | % | 0 | % | |||||||||||||
(6) STOCK-BASED COMPENSATION PLANS (continued) | |||||||||||||||||
The weighted average expected term of stock options represents the period of time that the stock options granted are expected to be outstanding based on historical exercise trends. The weighted average expected volatility is based on the historical price volatility of the Company’s common stock. The weighted average risk-free interest rate represents the U.S. Treasury bill rate for the expected term of the related stock options. The dividend yield represents the Company’s anticipated cash dividend over the expected term of the stock options. | |||||||||||||||||
Forfeitures of share-based payment awards are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The estimated average forfeiture rate for the years ended December 31, 2013 and 2012 was 40% and 37%, respectively. | |||||||||||||||||
A summary of stock option activity under the Option Plan for the years ended December 31, 2013 and 2012, are presented below: | |||||||||||||||||
Shares | Weighted | Weighted | Aggregate | ||||||||||||||
Under | Average | Average | Intrinsic | ||||||||||||||
Option | Exercise | Remaining | Value | ||||||||||||||
Price | Contractual | ||||||||||||||||
Life | |||||||||||||||||
Outstanding at January 1, 2012 | 1,661,750 | $ | 0.98 | ||||||||||||||
Granted | 322,500 | $ | 0.74 | ||||||||||||||
Exercised | (34,500 | ) | $ | 0.39 | |||||||||||||
Forfeited | (448,250 | ) | $ | 0.97 | |||||||||||||
Outstanding at December 31, 2012 | 1,501,500 | $ | 0.95 | 7.0 Years | $ | 78 | |||||||||||
Exercisable at December 31, 2012 | 810,623 | $ | 1.11 | 5.8 Years | $ | 50 | |||||||||||
Outstanding at January 1, 2013 | 1,501,500 | $ | 0.95 | ||||||||||||||
Granted | 1,424,216 | $ | 0.26 | ||||||||||||||
Exercised | (23,000 | ) | $ | 0.63 | |||||||||||||
Forfeited | (430,500 | ) | $ | 0.87 | |||||||||||||
Outstanding at December 31, 2013 | 2,472,216 | $ | 0.57 | 8.1 Years | $ | 178 | |||||||||||
Exercisable at December 31, 2013 | 808,623 | $ | 1.05 | 5.4 Years | $ | 5 | |||||||||||
A summary of status of the Company’s non-vested shares under option as of and for the year ended December 31, 2013 is presented below: | |||||||||||||||||
Non-vested | Weighted | ||||||||||||||||
Shares | Average | ||||||||||||||||
Under | Grant Date | ||||||||||||||||
Option | Fair Value | ||||||||||||||||
Non-vested at January 1, 2013 | 690,877 | $ | 0.69 | ||||||||||||||
Granted | 1,424,216 | $ | 0.22 | ||||||||||||||
Vested | (276,250 | ) | $ | 0.78 | |||||||||||||
Forfeited | (175,250 | ) | $ | 0.78 | |||||||||||||
Non-vested at December 31, 2013 | 1,663,593 | $ | 0.29 | ||||||||||||||
As of December 31, 2013, the Company had approximately $326 of unrecognized compensation expense related to stock options that will be recognized over a weighted-average period of approximately 3.5 years. In addition, the Company issued 23,000 shares of common stock in 2013 through a cashless exercise of 46,000 common stock options, pursuant to a separation agreement dated November 1, 2013 (Note 15 ). |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Taxes | ' | ||||||||
(7) INCOME TAXES | |||||||||
Income tax (benefit) expense consists of the following for the years ended December 31, 2013 and 2012: | |||||||||
2013 | 2012 | ||||||||
Current tax (benefit) expense: | |||||||||
Federal | $ | (1,835 | ) | $ | 784 | ||||
State | (79 | ) | 117 | ||||||
Penalties and interest | 55 | 55 | |||||||
(1,859 | ) | 956 | |||||||
Deferred tax (benefit) expense: | |||||||||
Federal | (806 | ) | (156 | ) | |||||
State | (60 | ) | (12 | ) | |||||
Valuation allowance | 1,935 | — | |||||||
1,069 | (168 | ) | |||||||
$ | (790 | ) | $ | 788 | |||||
A reconciliation of income tax computed at the U.S. statutory rate of 34% to the effective income tax rate is as follows: | |||||||||
2013 | 2012 | ||||||||
Statutory rate | (34 | )% | 34 | % | |||||
State taxes | (3 | ) | 3 | ||||||
Permanent differences and other | 3 | (4 | ) | ||||||
Change in valuation allowance | 24 | — | |||||||
Effective rate | (10 | )% | 34 | % | |||||
(7) INCOME TAXES (continued) | |||||||||
The tax effects of temporary differences that give rise to deferred tax assets (liabilities) at December 31, 2013 and 2012 are as follows: | |||||||||
2013 | 2012 | ||||||||
Current deferred tax assets (liabilities): | |||||||||
Accrued expenses | $ | 65 | $ | 130 | |||||
Deferred rent | - | 27 | |||||||
Accounts receivable | 671 | 673 | |||||||
Inventory | 970 | 1,113 | |||||||
Amortization | 135 | (21 | ) | ||||||
Prepaid expenses | (99 | ) | (67 | ) | |||||
Stock based compensation | 23 | — | |||||||
Tax Credits and NOL Carryforward | 233 | — | |||||||
Other | 9 | — | |||||||
2,007 | |||||||||
Less: Valuation allowance | (1,935 | ) | — | ||||||
Net current deferred tax assets | $ | 72 | $ | 1,855 | |||||
Long-term deferred tax assets (liabilities): | |||||||||
Property and equipment | $ | (969 | ) | $ | (1,182 | ) | |||
Deferred rent | 897 | 396 | |||||||
Net long-term deferred tax liabilities | $ | (72 | ) | $ | (786 | ) | |||
Net deferred tax liabilities | $ | $ | (786 | ) | |||||
The Company generated a net loss for income tax purposes of approximately $5,200 for 2013, which will be utilized as an income tax carryback for years 2010 through 2012. As a result, the Company reduced its income tax payable by $768 and is expecting a net income tax refund of $893, which is recorded as a current asset on the balance sheet. As a result, as of December 31, 2013, the Company has no available NOL carryforwards for federal tax purposes and approximately $3,500 for State purposes, which expire at various dates ranging from five to seven years. | |||||||||
The accounting standard related to income taxes applies to all tax positions and defines the confidence level that a tax position must meet in order to be recognized in the financial statements. This accounting standard requires that the tax effects of a position be recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If a tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are to be recognized. This accounting standard requires additional disclosures. The recognition of uncertain tax benefits are not expected to have a material impact on the Company’s effective tax rate or results of operations. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: | |||||||||
2013 | 2012 | ||||||||
Unrecognized tax benefits at the beginning of the period | $ | 67 | $ | 60 | |||||
Gross increases for State income tax liabilities | 127 | 7 | |||||||
Unrecognized tax benefits at the end of the period | $ | 194 | $ | 67 | |||||
Line_of_Credit
Line of Credit | 12 Months Ended |
Dec. 31, 2013 | |
Line of Credit | ' |
(8) LINE OF CREDIT | |
On December 19, 2012, the Company entered into a Loan and Security Agreement (the “Doral Agreement”) with Doral Healthcare Finance, a division of Doral Money, Inc. The Doral Agreement provides for an asset-backed revolving credit facility of up to $7,000, subject to reserves and reductions to the extent of changes in the Company’s asset borrowing base. Borrowings under the Doral Agreement bear interest at a variable rate equal to the greater of (i) the British Bankers’ Association LIBOR rate as published in The Wall Street Journal for dollar deposits in the amount of $1,000 with a maturity of one month or (ii) 3% per annum, plus, in each case, a margin of 6.75%. The Doral Agreement requires monthly interest payments in arrears on the first day of each month. The Doral Agreement will mature on December 19, 2014. The Company may terminate the Doral Agreement at any time prior to the maturity date upon thirty days’ prior written notice and upon payment in full of all outstanding obligations under the Doral Agreement. If the Company terminates the Doral Agreement, the Company must pay a specified early termination fee. As of December 31, 2013, $5,820 was outstanding under the Doral Agreement and $1,071 was available for borrowing. | |
The Doral Agreement requires a lockbox arrangement whereby all receipts are swept daily to reduce borrowings outstanding. This arrangement causes the Doral Agreement to be classified as a current liability. | |
As of December 31, 2013, the effective interest rate under the Doral Agreement was 8% (7% interest rate and 1% fees). | |
The Doral Agreement contains certain customary restrictive and financial covenants for asset-backed credit facilities. As of December 31, 2013, the Company was not in compliance with two of the quarterly financial covenants under the Doral Agreement, however the Company has received a covenant violation waiver for one of the financial covenant defaults. As a result, all amounts due under the credit agreement are callable by the lender. We are currently in discussions with the lender and expect to receive an additional waiver; however, no assurance can be given. |
Notes_Payable_and_Other_Obliga
Notes Payable and Other Obligations | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes Payable and Other Obligations | ' | ||||||||
(9) NOTES PAYABLE AND OTHER OBLIGATIONS | |||||||||
The Company has commitments under various operating and capital leases that are payable in monthly installments. On June 18, 2013, the Company renegotiated its existing building lease and entered into a new lease agreement for its existing building in Lone Tree, Colorado, effective May 1, 2013. The lease, which expires in November 2023, provides for two five-year renewal options at the then market rental rate. Under the lease, no rental payments are due for the first twelve months. For the remaining months of the lease, base monthly rent begins at $129 per month and escalates at $3 per month (or $0.50 per square foot) every twelve months, resulting in a monthly rent of $157 by January 2023. The Company anticipates that for accounting purposes, it will have an annual rental expense of $1,420 throughout the term of the lease. $. The lease also includes a tenant allowance of $1,065, of which $500 is to be used for leasehold improvements and $565 may be used to apply to rent in December 2013 and beyond. Such allowances are included in the Company’s deferred rent liability and deposit accounts. The lease contains customary events of default, termination, maintenance, indemnification and other lease terms. | |||||||||
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 6% to 18%. At December 31, 2013, the total recorded cost of assets under capital leases was approximately $508. Accumulated depreciation related to these assets totals approximately $310. | |||||||||
In July 2012, the Company entered into a financing agreement for an automobile for use by the Chief Executive Officer for $73. The term of the financing is for 36 months, with a 2% annual interest rate and monthly installments of $2 beginning in August 2012. As of December 31, 2013, the balance of this note was $15. | |||||||||
(9) NOTES PAYABLE AND OTHER OBLIGATIONS (continued) | |||||||||
As of December 31, 2013, future minimum lease payments under non-cancelable notes payable, operating and capital leases are as follows: | |||||||||
Notes and | Operating | ||||||||
Capital | Leases | ||||||||
Leases | |||||||||
2014 | $ | 107 | $ | 1,114 | |||||
2015 | 66 | 1,588 | |||||||
2016 | 45 | 1,626 | |||||||
2017 | 45 | 1,663 | |||||||
Thereafter | 13 | 10,609 | |||||||
Total future minimum lease payments | 276 | $ | 16,600 | ||||||
Less amount representing interest | (34 | ) | |||||||
Present value of net minimum lease payments | 242 | ||||||||
Less current portion | (92 | ) | |||||||
Notes payable and other obligations | $ | 150 | |||||||
Rent expense under all operating leases for 2013 and 2012 was approximately $1,716 and $1,687, respectively. |
Fair_Value_Measurements
Fair Value Measurements | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Fair Value Measurements | ' | ||||||||
(10) FAIR VALUE MEASUREMENTS | |||||||||
The Company measures certain assets and liabilities pursuant to accounting guidance which establishes a three-tier fair value hierarchy and prioritizes the inputs used in measuring fair value. These tiers include: | |||||||||
— | Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. | ||||||||
— | Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. | ||||||||
— | Level 3: Unobservable inputs are used when little or no market data is available. | ||||||||
The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2013, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value: | |||||||||
December 31, | Significant Unobservable Inputs | ||||||||
2013 | (Level 3) | ||||||||
Liabilities: | |||||||||
Contingent consideration | $ | 7 | $ | 7 | |||||
The fair value of the contingent consideration was determined using a discounted cash flow model at the acquisition date and is revalued at each reporting date or more frequently if circumstances dictate based on changes in the discount periods and rates, changes in the timing and amount of the revenue estimates and changes in probability assumptions with respect to the likelihood of achieving the obligations. The change in the fair value of this obligation and the accretion expense related to the net increase in the net present value of the contingent liability totaled $97 and $31, respectively, for the years ended December 31, 2013 and 2012. .Contingent payments of $3 were made during the year ended December 31, 2013. | |||||||||
Changes in the fair value of these obligations are recorded as income or expense within the line item “Other income (expense)” in the Company’s consolidated statements of operations. Accretion expense related to the increase in the net present value of the contingent liabilities is also included in the line item “Other income (expense)” in the Company’s consolidated statements of operations. The fair value measurement is based on significant inputs not observable in the market, which are referred to as Level 3 inputs. Changes in the fair value of the Level 3 liabilities for the year ended December 31, 2013: | |||||||||
(10) FAIR VALUE MEASUREMENTS (continued) | |||||||||
Balance at beginning of 2012 | $ | - | |||||||
Additions | 135 | ||||||||
Accretion expense | 21 | ||||||||
Change in fair value of contingent consideration | (52 | ) | |||||||
Balance at end of 2012 | 104 | ||||||||
Payments | (3 | ) | |||||||
Accretion expense | 12 | ||||||||
Change in fair value of contingent consideration | (106 | ) | |||||||
Balance at end of 2013 | $ | 7 | |||||||
Stockholders_Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2013 | |
Stockholders' Equity | ' |
(11) STOCKHOLDERS’ EQUITY | |
In March 2012, the Company issued 266,478 shares of restricted common stock of the Company valued at $158 related to its acquisition of NeuroDyne. During 2012, 34,500 shares of common stock were issued for cash of $13, upon the exercise of stock options, 5,625 shares of common stock were issued upon the cashless exercise of 50,000 non-employee warrants, and 25,000 shares of common stock were issued to individuals as non-cash compensation for services rendered, valued at approximately $20 (based on the market price of the Company’s common stock on the date of the grants). | |
On November 1, 2013, an employee entered into a separation agreement with the Company that, among other things, converted 46,000 common stock options into 23,000 common shares at a cashless exercise price of $0.50 per share. (Note 15) | |
For stock warrants or options granted to non-employees, the Company measures fair value of the equity instruments utilizing the Black-Scholes method if that valuation method results in a more reliable measurement than the fair value of the consideration or the services received. For stock granted, the Company measures fair value of the shares issued utilizing the market price of the shares on the date the transaction takes place. The Company amortizes such costs over the related period of service. |
Concentrations
Concentrations | 12 Months Ended |
Dec. 31, 2013 | |
Concentrations | ' |
(12) CONCENTRATIONS | |
The Company sourced approximately 21% of its electrotherapy products from one contract manufacturer in 2013 and 18% in 2012. Management believes that its relationships with suppliers are strong; however, if necessary these relationships can be replaced. If the relationships were to be replaced, there may be a short-term disruption to operations, a period of time in which products may not be available and additional expenses may be incurred. | |
The Company had receivables from one private health insurance carrier at December 31, 2013 and 2012 of approximately 7% and 22%, respectively. | |
The amount of net revenue derived from Medicare and Medicaid programs for 2013 and 2012 was approximately 3% and 11%, respectively. |
Retirement_Plan
Retirement Plan | 12 Months Ended |
Dec. 31, 2013 | |
Retirement Plan | ' |
(13) RETIREMENT PLAN | |
The Company has adopted a retirement plan with a 401(k) deferred compensation provision effective July 1, 2012. Substantially all full-time employees are eligible to participate in the 401(k) plan as long as they are at least 18 years of age and have completed at least three months of employment. The 401(k) plan provides for contributions by the Company at management’s discretion. The Company made no contributions to this plan in 2013 or 2012. |
Litigation
Litigation | 12 Months Ended |
Dec. 31, 2013 | |
Litigation | ' |
(14) 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 upon the advice of counsel, 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 | 12 Months Ended |
Dec. 31, 2013 | |
Related Party Transactions | ' |
(15) RELATED PARTY TRANSACTIONS | |
On February 1, 2012, Ms. Birgitte Sandgaard, spouse of Mr. Thomas Sandgaard (the Company’s President and CEO), retired from the Company. Ms. Sandgaard signed a retirement agreement, which provided her with a $90 lump sum payment, title to a Company automobile and immediate vesting on all outstanding stock options (with expiration on February 1, 2012). The terms of the retirement agreement also included a release of claims and non-compete. Concurrently, Ms. Sandgaard also entered into a 24-month consulting agreement with the Company, which provides for ongoing consulting by Ms. Sandgaard in exchange for monthly cash payments of $8. The consulting agreement can be cancelled at anytime, provided that a 30 day notice is given, by Ms. Sandgaard or the Company. For the years ended December 31, 2013 and 2012, the Company incurred $8 and $96, respectively in consulting expense in accordance with the consulting agreement. | |
On November 1, 2013, Mr. Joachim Sandgaard, son of Mr. Thomas Sandgaard, entered into a separation agreement with the Company, which provided him with a $42 lump sum payment and converted 46,000 common stock options into 23,000 common shares at a cashless exercise a price of $0.50. |
Segment_Reporting
Segment Reporting | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Segment Reporting | ' | ||||||||||||||||
(16) SEGMENT REPORTING | |||||||||||||||||
At December 31, 2013, the Company has determined that it has three reporting segments comprised of the following subsidiaries, ZMI and ZBC, ZND and ZEU, and ZMS. This determination was made based on the nature of the products and services offered to customers or the nature of the function in the organization. The accounting policies for each of these segments are the same as those described in Note 2, and inter-segment transactions are eliminated. Net revenue was primarily generated from sales in the United States. | |||||||||||||||||
ZMI & | ZND | ZMS | TOTAL | ||||||||||||||
ZBC | & | ||||||||||||||||
ZEU | |||||||||||||||||
YEAR ENDED DECEMBER 31, 2013 | |||||||||||||||||
Sales | $ | 21,184 | $ | 500 | $ | — | $ | 21,684 | |||||||||
Gross profit | 13,333 | 211 | — | 13,544 | |||||||||||||
Total assets | 17,564 | 756 | 10 | 18,330 | |||||||||||||
Interest expense | 607 | - | - | 607 | |||||||||||||
Depreciation and amortization | 732 | 99 | 8 | 839 | |||||||||||||
Income tax expense (benefit) | (523 | ) | (72 | ) | (195 | ) | (790 | ) | |||||||||
Goodwill impairment | - | 251 | - | 251 | |||||||||||||
Intangible impairment | - | 160 | - | 160 | |||||||||||||
YEAR ENDED DECEMBER 31, 2012 | |||||||||||||||||
Sales | $ | 39,372 | $ | 294 | $ | — | $ | 39,666 | |||||||||
Gross profit | 30,708 | 188 | - | 30,896 | |||||||||||||
Total assets | 25,262 | 674 | — | 25,936 | |||||||||||||
Interest expense | 435 | - | - | 435 | |||||||||||||
Depreciation and amortization | 854 | 54 | 4 | 912 | |||||||||||||
Income tax expense (benefit) | 1,264 | (236 | ) | (241 | ) | 788 | |||||||||||
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
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. | |
Noncontrolling Interest | ' |
NONCONTROLLING INTEREST | |
Noncontrolling interest in the equity of a subsidiary is accounted for and reported as equity. Noncontrolling interest represents the 20% ownership in the Company’s majority-owned subsidiary, ZBC. In 2012, the noncontrolling interest member contributed $10 of property and equipment to ZBC. | |
Use of Estimates | ' |
USE OF ESTIMATES | |
Preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (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 contractual adjustments and uncollectible accounts receivable, the reserve for obsolete and damaged inventory, stock-based compensation, valuation of goodwill and other long-lived assets, and income taxes. | |
Revenue Recognition and Allowances for Provider Discounts and Collectability | ' |
REVENUE RECOGNITION AND ALLOWANCES FOR PROVIDER DISCOUNTS 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. Accordingly, the Company recognizes revenue, both rental and sales, when products have been delivered to the patient and the patient’s insurance (if the patient has insurance) has been verified. For medical products that are sold from inventories consigned at clinic locations, the Company recognizes revenue when it receives notice that the product has been prescribed and delivered to the patient and the patient’s insurance coverage has been verified or preauthorization has been obtained from the insurance company, when required. 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, which fulfills its order and transfers title. Revenue is reported net, after adjustments for estimated insurance company or governmental agency (collectively “Third-party Payors”) reimbursement deductions. The deductions are known throughout the health care industry as “contractual adjustments” whereby the Third-party Payors unilaterally reduce the amount they reimburse for the Company’s products. | |
(2) SIGNIFICANT ACCOUNTING POLICIES (continued) | |
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 this 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 contractual adjustments and records additions to the allowance to account for the risk of nonpayment. Contractual adjustments result from reimbursements from Third-party Payors that are less than amounts claimed or 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. Accordingly, changes to the allowance for contractual adjustments, 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. | |
Due to the nature of the 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. 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 an 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 that insurance provider. 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. | |
As of December 31, 2013, the Company believes it has an adequate allowance for contractual adjustments relating to all known insurance disputes and refund requests. 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 contractual adjustments, the Company records an allowance for uncollectible accounts receivable. 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. | |
At December 31, 2013 and 2012, the allowance for uncollectible accounts receivable is $1,837. | |
Fair Value of Financial Instruments | ' |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
The Company’s financial instruments at December 31, 2013 include cash, accounts receivable and accounts payable, for which current carrying amounts approximate fair value due to their short-term nature. Financial instruments at December 31, 2013 also include the line of credit and notes payable, 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 | |
Inventories, which primarily represent finished goods, are valued at the lower of cost (average) or market. Finished goods include products held at the Company’s headquarters and at different locations by health care providers or other third parties for rental or sale to patients. Total (gross) inventories at December 31, 2013 included $5,120 of finished goods, $310 of parts and $850 of supplies. Total (gross) inventories at December 31, 2012 included $6,042 of finished goods, $533 of parts and $766 of supplies. | |
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. To fulfill orders faster, the Company places a large amount of its inventory with field sales representatives. This increases the sensitivity of these products to obsolescence reserve estimates. As this inventory is not in the Company’s possession, management maintains additional reserves for estimated shrinkage of these inventories based on the Company’s aging. At December 31, 2013 and 2012, the Company had an allowance for obsolete and damaged inventory of approximately $1,278 and $1,181 respectively. In addition, during the year ended December 31, 2013, the Company wrote off a portion of its field inventory totaling approximately $1,340, as a result of changes in industry conditions driven primarily by health care reform. These changes caused a reduction in the Company’s field sales force which negatively impacted its field inventory. | |
The Company had $1,000 of open purchase commitments at December 31, 2013. | |
Property and Equipment | ' |
PROPERTY AND EQUIPMENT | |
Property and equipment are stated at cost. Products on rental contracts are placed in property and equipment and depreciated over their estimated useful life. The Company removes the cost and the related accumulated depreciation from the accounts of assets sold or retired, and the resulting gains or losses are included in the results of operations. Depreciation is computed using the straight-line method. As rental inventory contributes directly to the revenue generating process, the Company classifies the depreciation of rental inventory to cost of revenue. | |
Repairs and maintenance costs are charged to expense as incurred. | |
Shipping Costs | ' |
SHIPPING COSTS | |
Shipping costs are included in cost of sales and rentals. | |
Goodwill and Intangible Assets | ' |
GOODWILL AND INTANGIBLE ASSETS | |
Goodwill represents the excess of the purchase price over the fair value of the net assets of the business acquired. Authoritative guidance requires that goodwill be assessed for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment assessment requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgments are required to estimate the fair value of a reporting unit including estimating future cash flows, determining appropriate discount rates and other assumptions. When conducting its goodwill impairment assessment, the Company initially performs a qualitative evaluation to determine if it is more likely than not that the fair value of its reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a two-step goodwill impairment test. | |
(2) SIGNIFICANT ACCOUNTING POLICIES (continued) | |
The Company determined, based on its qualitative evaluation, that it was necessary to perform the two-step goodwill impairment test during the second and fourth quarters of 2013, primarily because of the significant decline in sales in its ZMI electrotherapy products. In March 2012, the Company acquired substantially all of the assets and business of NeuroDyne Medical Corp. (NeuroDyne). The Company modified its business forecast for NeuroDyne during 2013, resulting in reduced estimated sales and cash flow, as compared to the original business forecast at the time of the acquisition. Management therefore performed the two-step goodwill impairment test and determined that goodwill related to NeuroDyne was impaired and recorded a $251 goodwill impairment charge during the year ended December 31, 2013. | |
Intangible assets with estimable lives are amortized in a pattern consistent with the asset’s identifiable cash flows or using a straight- line method over their remaining estimated benefit periods if the pattern of cash flows is not estimable. The Company reviews the carrying value of intangible and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparison of their carrying amounts to the undiscounted cash flows that the asset or asset group is expected to generate. If the carrying amount of the assets exceeds the undiscounted cash flows the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. The Company’s intangible assets include assets acquired in the acquisition of NeuroDyne. The Company modified its business forecast for NeuroDyne during 2013, resulting in reduced estimated sales and cash flow, as compared to the original business forecast at the time of the acquisition. Therefore, the Company recorded an impairment charge of $160 during the year ended December 31, 2013 related to the NeuroDyne intangible assets. The Company utilized a discounted cash flow (DCF) model to determine fair value for both goodwill and intangible assets as of December 31, 2013. | |
Capitalized Software Development Costs | ' |
CAPITALIZED SOFTWARE DEVELOPMENT COSTS | |
The Company capitalizes software development costs incurred during the application development stage related to new software or major enhancements to the functionality of existing software that is developed solely to meet the entity’s internal operational needs and when no substantive plans exist or are being developed to market the software externally. Costs capitalized include external direct costs of materials and services and internal payroll and payroll-related costs. Any costs during the preliminary project stage or related to training or maintenance are expensed as incurred. Capitalization ceases when the software project is substantially complete and ready for its intended use. The capitalization and ongoing assessment of recoverability of development costs requires considerable judgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility, and estimated economic life. When the projects are ready for their intended use, the Company amortizes such costs over their estimated useful lives of five years. | |
Stock-based Compensation | ' |
STOCK-BASED COMPENSATION | |
The Company accounts for stock-based compensation through recognition of the cost of employee services received in exchange for an award of equity instruments, which is measured based on the grant date fair value of the award that is ultimately expected to vest during the period. The stock-based compensation expense is generally recognized over the period during which an employee is required to provide service in exchange for the award (the requisite service period, which in the Company’s case is the same as the vesting period). For awards subject to the achievement of performance metrics, stock based compensation expense is recognized when it becomes probable that the performance condition will be achieved. | |
Advertising | ' |
ADVERTISING | |
The Company expenses advertising costs as they are incurred. Advertising expense for the years ended December 31, 2013 and 2012 was approximately $115 and $95, respectively. | |
Research and Development | ' |
RESEARCH AND DEVELOPMENT | |
Research and development costs are expensed when incurred. Research and development expense for the years ended December 31, 2013 and 2012 was approximately $754 and $874, respectively. Research and development costs as well as salaries related to research and development are included in selling, general and administrative expenses. | |
Income Taxes | ' |
INCOME TAXES | |
The provision for income taxes includes taxes payable or refundable for the current period and the deferred tax consequences of transactions that have been recognized in the Company’s consolidated financial statements or income tax returns. Temporary differences result primarily from basis differences in property and equipment, accounts receivable, inventory and deferred rent. The carrying value of deferred tax assets is determined based on an evaluation of whether the Company is more likely than not to realize the assets. A valuation allowance is established, when considered necessary, to reduce deferred tax assets to the amounts expected to be realized. | |
The Company accounts for uncertain tax positions in accordance with the accounting standard related to income taxes. The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. As of December 31, 2013 and 2012, the Company had accrued unrecognized tax benefits, penalties and interest of $194 and $67, respectively. The Company files income tax returns in the U.S. and various state jurisdictions, and there are open statutes of limitations for taxing authorities to audit our tax returns from 2010 through the current period. | |
Foreign Currency Transactions | ' |
FOREIGN CURRENCY TRANSACTIONS | |
Foreign currency transaction gains and losses are included in other income (expense) in the accompanying consolidated statements of operations. Foreign currency transaction gains for the years ended December 31, 2013 and 2012 were insignificant. | |
Reclassifications | ' |
RECLASSIFICATIONS | |
Certain reclassifications have been made to the prior years’ consolidated financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations. | |
Recent Accounting Pronouncements | ' |
RECENT ACCOUNTING PRONOUNCEMENTS | |
In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11 “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” Under ASU 2013-11, an entity is required to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. If a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this guidance affects presentation only and, therefore, it is not expected to have a material impact on the Company's financial condition, results of operations or cash flows. | |
Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have an impact on the Company’s consolidated financial statements. |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Property and Equipment | ' | ||||||||||||
Cost, accumulated depreciation, and the related estimated useful lives of property and equipment as of December 31, 2013 and 2012 are as follows: | |||||||||||||
2013 | 2012 | Useful lives | |||||||||||
Office furniture and equipment | $ | 2,073 | $ | 1,631 | 3-7 years | ||||||||
Rental inventory | 2,142 | 3,147 | 5 years | ||||||||||
Vehicles | 76 | 76 | 5 years | ||||||||||
Leasehold improvements | 486 | 375 | 2-6 years | ||||||||||
Assembly equipment | 171 | 168 | 7 years | ||||||||||
4,948 | 5,397 | ||||||||||||
Less accumulated depreciation | (2,057 | ) | (1,692 | ) | |||||||||
$ | 2,891 | $ | 3,705 | ||||||||||
Intangible_Assets_Tables
Intangible Assets (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Acquisition of Intangible Assets | ' | ||||||||
At December 31, 2013 and 2012, intangible assets consist of the following | |||||||||
Amortization | 2013 | 2012 | |||||||
Life Years | |||||||||
Software and development costs | 5 | $ | 325 | $ | 205 | ||||
Trade names | 5 | - | 72 | ||||||
Non-compete agreement | 5 | - | 26 | ||||||
Technology | 5 | - | 135 | ||||||
Domain name | 1 | - | 18 | ||||||
Total intangible assets, gross | 325 | 456 | |||||||
Less: accumulated amortization | (147 | ) | (107 | ) | |||||
Total intangible assets, net | $ | 178 | $ | 349 | |||||
Earnings_Loss_Per_Share_Tables
Earnings (Loss) Per Share (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Calculation of Basic and Diluted Earnings Per Share | ' | ||||||||
The calculation of basic and diluted earnings per share for 2013 and 2012 is as follows: | |||||||||
2013 | 2012 | ||||||||
BASIC | |||||||||
Net(loss) income attributable to common stockholders | $ | (7,301 | ) | $ | 1,553 | ||||
Weighted average shares outstanding—basic | 31,152,015 | 31,062,428 | |||||||
Net (loss) income per share—basic | $ | (0.23 | ) | $ | 0.05 | ||||
DILUTED | |||||||||
Net (loss) income attributable to common stockholders | $ | (7,301 | ) | $ | 1,553 | ||||
Weighted average shares outstanding—basic | 31,152,015 | 31,062,428 | |||||||
Dilutive securities | — | 159,698 | |||||||
Weighted average shares outstanding, diluted | 31,152,015 | 31,222,126 | |||||||
Net (loss) income per share, diluted | $ | (0.23 | ) | $ | 0.05 | ||||
StockBased_Compensation_Plans_
Stock-Based Compensation Plans (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
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 during the years ended December 31, 2013 and 2012: | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Weighted average expected term | 6.25 years | 6.25 years | |||||||||||||||
Weighted average volatility | 111 | % | 134 | % | |||||||||||||
Weighted average risk-free interest rate | 1.54 | % | 0.8 | % | |||||||||||||
Dividend yield | 0 | % | 0 | % | |||||||||||||
Summary of Stock Option Activity Under the Option Plan | ' | ||||||||||||||||
A summary of stock option activity under the Option Plan for the years ended December 31, 2013 and 2012, are presented below: | |||||||||||||||||
Shares | Weighted | Weighted | Aggregate | ||||||||||||||
Under | Average | Average | Intrinsic | ||||||||||||||
Option | Exercise | Remaining | Value | ||||||||||||||
Price | Contractual | ||||||||||||||||
Life | |||||||||||||||||
Outstanding at January 1, 2012 | 1,661,750 | $ | 0.98 | ||||||||||||||
Granted | 322,500 | $ | 0.74 | ||||||||||||||
Exercised | (34,500 | ) | $ | 0.39 | |||||||||||||
Forfeited | (448,250 | ) | $ | 0.97 | |||||||||||||
Outstanding at December 31, 2012 | 1,501,500 | $ | 0.95 | 7.0 Years | $ | 78 | |||||||||||
Exercisable at December 31, 2012 | 810,623 | $ | 1.11 | 5.8 Years | $ | 50 | |||||||||||
Outstanding at January 1, 2013 | 1,501,500 | $ | 0.95 | ||||||||||||||
Granted | 1,424,216 | $ | 0.26 | ||||||||||||||
Exercised | (23,000 | ) | $ | 0.63 | |||||||||||||
Forfeited | (430,500 | ) | $ | 0.87 | |||||||||||||
Outstanding at December 31, 2013 | 2,472,216 | $ | 0.57 | 8.1 Years | $ | 178 | |||||||||||
Exercisable at December 31, 2013 | 808,623 | $ | 1.05 | 5.4 Years | $ | 5 | |||||||||||
Summary of Status of the Company's Non-Vested Shares Under Option | ' | ||||||||||||||||
A summary of status of the Company’s non-vested shares under option as of and for the year ended December 31, 2013 is presented below: | |||||||||||||||||
Non-vested | Weighted | ||||||||||||||||
Shares | Average | ||||||||||||||||
Under | Grant Date | ||||||||||||||||
Option | Fair Value | ||||||||||||||||
Non-vested at January 1, 2013 | 690,877 | $ | 0.69 | ||||||||||||||
Granted | 1,424,216 | $ | 0.22 | ||||||||||||||
Vested | (276,250 | ) | $ | 0.78 | |||||||||||||
Forfeited | (175,250 | ) | $ | 0.78 | |||||||||||||
Non-vested at December 31, 2013 | 1,663,593 | $ | 0.29 | ||||||||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Schedule of Income Tax (Benefit) Expense | ' | ||||||||
Income tax (benefit) expense consists of the following for the years ended December 31, 2013 and 2012: | |||||||||
2013 | 2012 | ||||||||
Current tax (benefit) expense: | |||||||||
Federal | $ | (1,835 | ) | $ | 784 | ||||
State | (79 | ) | 117 | ||||||
Penalties and interest | 55 | 55 | |||||||
(1,859 | ) | 956 | |||||||
Deferred tax (benefit) expense: | |||||||||
Federal | (806 | ) | (156 | ) | |||||
State | (60 | ) | (12 | ) | |||||
Valuation allowance | 1,935 | — | |||||||
1,069 | (168 | ) | |||||||
$ | (790 | ) | $ | 788 | |||||
Schedule of Reconciliation of Income Tax | ' | ||||||||
A reconciliation of income tax computed at the U.S. statutory rate of 34% to the effective income tax rate is as follows: | |||||||||
2013 | 2012 | ||||||||
Statutory rate | (34 | )% | 34 | % | |||||
State taxes | (3 | ) | 3 | ||||||
Permanent differences and other | 3 | (4 | ) | ||||||
Change in valuation allowance | 24 | — | |||||||
Effective rate | (10 | )% | 34 | % | |||||
Schedule of the Tax Effects of Temporary Differences That Give Rise to Deferred Tax Assets (Liabilities) | ' | ||||||||
(7) INCOME TAXES (continued) | |||||||||
The tax effects of temporary differences that give rise to deferred tax assets (liabilities) at December 31, 2013 and 2012 are as follows: | |||||||||
2013 | 2012 | ||||||||
Current deferred tax assets (liabilities): | |||||||||
Accrued expenses | $ | 65 | $ | 130 | |||||
Deferred rent | - | 27 | |||||||
Accounts receivable | 671 | 673 | |||||||
Inventory | 970 | 1,113 | |||||||
Amortization | 135 | (21 | ) | ||||||
Prepaid expenses | (99 | ) | (67 | ) | |||||
Stock based compensation | 23 | — | |||||||
Tax Credits and NOL Carryforward | 233 | — | |||||||
Other | 9 | — | |||||||
2,007 | |||||||||
Less: Valuation allowance | (1,935 | ) | — | ||||||
Net current deferred tax assets | $ | 72 | $ | 1,855 | |||||
Long-term deferred tax assets (liabilities): | |||||||||
Property and equipment | $ | (969 | ) | $ | (1,182 | ) | |||
Deferred rent | 897 | 396 | |||||||
Net long-term deferred tax liabilities | $ | (72 | ) | $ | (786 | ) | |||
Net deferred tax liabilities | $ | $ | (786 | ) | |||||
Schedule of Reconciliation of the Beginning and Ending Amount of Unrecognized Tax Benefits | ' | ||||||||
The accounting standard related to income taxes applies to all tax positions and defines the confidence level that a tax position must meet in order to be recognized in the financial statements. This accounting standard requires that the tax effects of a position be recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If a tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are to be recognized. This accounting standard requires additional disclosures. The recognition of uncertain tax benefits are not expected to have a material impact on the Company’s effective tax rate or results of operations. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: | |||||||||
2013 | 2012 | ||||||||
Unrecognized tax benefits at the beginning of the period | $ | 67 | $ | 60 | |||||
Gross increases for State income tax liabilities | 127 | 7 | |||||||
Unrecognized tax benefits at the end of the period | $ | 194 | $ | 67 | |||||
Notes_Payable_and_Other_Obliga1
Notes Payable and Other Obligations (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Future Minimum Lease Payments Under Non-Cancelable Notes Payable, Operating and Capital Leases | ' | ||||||||
(9) NOTES PAYABLE AND OTHER OBLIGATIONS (continued) | |||||||||
As of December 31, 2013, future minimum lease payments under non-cancelable notes payable, operating and capital leases are as follows: | |||||||||
Notes and | Operating | ||||||||
Capital | Leases | ||||||||
Leases | |||||||||
2014 | $ | 107 | $ | 1,114 | |||||
2015 | 66 | 1,588 | |||||||
2016 | 45 | 1,626 | |||||||
2017 | 45 | 1,663 | |||||||
Thereafter | 13 | 10,609 | |||||||
Total future minimum lease payments | 276 | $ | 16,600 | ||||||
Less amount representing interest | (34 | ) | |||||||
Present value of net minimum lease payments | 242 | ||||||||
Less current portion | (92 | ) | |||||||
Notes payable and other obligations | $ | 150 | |||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Fair Value of Assets and Liabilities on a Recurring Basis | ' | ||||||||
The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2013, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value: | |||||||||
December 31, | Significant Unobservable Inputs | ||||||||
2013 | (Level 3) | ||||||||
Liabilities: | |||||||||
Contingent consideration | $ | 7 | $ | 7 | |||||
Changes in the Fair Value of the Level 3 Liabilities | ' | ||||||||
Changes in the fair value of these obligations are recorded as income or expense within the line item “Other income (expense)” in the Company’s consolidated statements of operations. Accretion expense related to the increase in the net present value of the contingent liabilities is also included in the line item “Other income (expense)” in the Company’s consolidated statements of operations. The fair value measurement is based on significant inputs not observable in the market, which are referred to as Level 3 inputs. Changes in the fair value of the Level 3 liabilities for the year ended December 31, 2013: | |||||||||
(10) FAIR VALUE MEASUREMENTS (continued) | |||||||||
Balance at beginning of 2012 | $ | - | |||||||
Additions | 135 | ||||||||
Accretion expense | 21 | ||||||||
Change in fair value of contingent consideration | (52 | ) | |||||||
Balance at end of 2012 | 104 | ||||||||
Payments | (3 | ) | |||||||
Accretion expense | 12 | ||||||||
Change in fair value of contingent consideration | (106 | ) | |||||||
Balance at end of 2013 | $ | 7 | |||||||
Segment_Reporting_Tables
Segment Reporting (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Summarized Information about Reported Segment | ' | ||||||||||||||||
ZMI & | ZND | ZMS | TOTAL | ||||||||||||||
ZBC | & | ||||||||||||||||
ZEU | |||||||||||||||||
YEAR ENDED DECEMBER 31, 2013 | |||||||||||||||||
Sales | $ | 21,184 | $ | 500 | $ | — | $ | 21,684 | |||||||||
Gross profit | 13,333 | 211 | — | 13,544 | |||||||||||||
Total assets | 17,564 | 756 | 10 | 18,330 | |||||||||||||
Interest expense | 607 | - | - | 607 | |||||||||||||
Depreciation and amortization | 732 | 99 | 8 | 839 | |||||||||||||
Income tax expense (benefit) | (523 | ) | (72 | ) | (195 | ) | (790 | ) | |||||||||
Goodwill impairment | - | 251 | - | 251 | |||||||||||||
Intangible impairment | - | 160 | - | 160 | |||||||||||||
YEAR ENDED DECEMBER 31, 2012 | |||||||||||||||||
Sales | $ | 39,372 | $ | 294 | $ | — | $ | 39,666 | |||||||||
Gross profit | 30,708 | 188 | - | 30,896 | |||||||||||||
Total assets | 25,262 | 674 | — | 25,936 | |||||||||||||
Interest expense | 435 | - | - | 435 | |||||||||||||
Depreciation and amortization | 854 | 54 | 4 | 912 | |||||||||||||
Income tax expense (benefit) | 1,264 | (236 | ) | (241 | ) | 788 | |||||||||||
Organization_Nature_of_Busines1
Organization, Nature of Business and Management's Plans (Details Textual) (USD $) | 12 Months Ended | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 20, 2014 | Dec. 31, 2013 | Dec. 31, 2013 |
Subsequent Event | Minimum | Maximum | |||
Organization, Nature of Business and Managements' Plans (Textual) [Abstract] | ' | ' | ' | ' | ' |
Percentage of limited liability | 80.00% | ' | ' | ' | ' |
Negative cash flows from operations | $382 | $879 | ' | ' | ' |
Net (loss) income | -7,301 | 1,553 | ' | ' | ' |
Fixed expenses reduced by cutting annual employee costs through headcount reduction | 4,200 | ' | ' | ' | ' |
Free rent period | ' | ' | ' | 1-May-13 | 30-Apr-14 |
Cash savings due to renegotiated existing building lease | 1,500 | ' | ' | ' | ' |
Line of credit | 5,820 | 5,906 | ' | ' | ' |
Maximum borrowings under line of credit | 7,000 | ' | ' | ' | ' |
Line of credit current borrowing capacity | ' | ' | $54 | ' | ' |
Significant_Accounting_Policie2
Significant Accounting Policies (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Significant Accounting Policies [Abstract] | ' | ' |
Equity and Noncontrolling interest | 20.00% | ' |
Issuance of noncontrolling interest in ZBC (Note2) | ' | $10 |
Allowance for uncollectible accounts receivable | 1,837 | 1,837 |
Inventory finished goods | 5,120 | 6,042 |
Inventory parts | 310 | 533 |
Inventory supplies | 850 | 766 |
Write-off of field inventory | 1,340 | ' |
Reserve for obsolete and damaged inventory | 1,278 | 1,181 |
Open purchase commitments | 1,000 | ' |
Impairment of goodwill | 251 | ' |
Impairment of intangible assets | 160 | ' |
Advertising expense | 115 | 95 |
Research and development expense | 754 | 874 |
Company accrued unrecognized tax benefits, penalties and interest | 194 | 67 |
NeuroDyne | ' | ' |
Significant Accounting Policies [Abstract] | ' | ' |
Impairment of goodwill | 251 | ' |
Impairment of intangible assets | $160 | ' |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Property Plant And Equipment [Line Items] | ' | ' |
Property and Equipment, Gross | $4,948 | $5,397 |
Less accumulated depreciation | -2,057 | -1,692 |
Property and Equipment, Net | 2,891 | 3,705 |
Office furniture and equipment | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property and Equipment, Gross | 2,073 | 1,631 |
Office furniture and equipment | Minimum | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property and Equipment, Useful Life | '3 years | ' |
Office furniture and equipment | Maximum | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property and Equipment, Useful Life | '7 years | ' |
Rental inventory | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property and Equipment, Gross | 2,142 | 3,147 |
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 | ' |
Leasehold improvements | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property and Equipment, Gross | 486 | 375 |
Leasehold improvements | Minimum | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property and Equipment, Useful Life | '2 years | ' |
Leasehold improvements | Maximum | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property and Equipment, Useful Life | '6 years | ' |
Assembly equipment | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property and Equipment, Gross | $171 | $168 |
Property and Equipment, Useful Life | '7 years | ' |
Property_and_Equipment_Details1
Property and Equipment (Details Textual) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Property and Equipment (Textual) [Abstract] | ' | ' |
Depreciation expense | $708 | $831 |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Acquisition of intangible assets | ' | ' |
Total intangible assets, gross | $325 | $456 |
Less: accumulated amortization | -147 | -107 |
Total intangible assets, net | 178 | 349 |
Software and development costs | ' | ' |
Acquisition of intangible assets | ' | ' |
Amortization Life Years | '5 years | ' |
Total intangible assets, gross | 325 | 205 |
Trade names | ' | ' |
Acquisition of intangible assets | ' | ' |
Amortization Life Years | '5 years | ' |
Total intangible assets, gross | ' | 72 |
Non-compete agreement | ' | ' |
Acquisition of intangible assets | ' | ' |
Amortization Life Years | '5 years | ' |
Total intangible assets, gross | ' | 26 |
Technology | ' | ' |
Acquisition of intangible assets | ' | ' |
Amortization Life Years | '5 years | ' |
Total intangible assets, gross | ' | 135 |
Domain Name | ' | ' |
Acquisition of intangible assets | ' | ' |
Amortization Life Years | '1 year | ' |
Total intangible assets, gross | ' | $18 |
Intangible_Assets_Details_Text
Intangible Assets (Details Textual) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Intangible Assets (Textual) [Abstract] | ' | ' |
Amortization of intangible assets | $131 | $81 |
Earnings_Loss_Per_Share_Detail
Earnings (Loss) Per Share (Details) (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
BASIC | ' | ' |
Net(loss) income attributable to common stockholders | ($7,301) | $1,553 |
Weighted average shares outstanding—basic | 31,152,015 | 31,062,428 |
Net (loss) income per share—basic | ($0.23) | $0.05 |
DILUTED | ' | ' |
Net(loss) income attributable to common stockholders | ($7,301) | $1,553 |
Weighted average shares outstanding—basic | 31,152,015 | 31,062,428 |
Dilutive securities | ' | 159,698 |
Weighted average shares outstanding, diluted | 31,152,015 | 31,222,126 |
Net (loss) income per share, diluted | ($0.23) | $0.05 |
Earnings_Loss_Per_Share_Detail1
Earnings (Loss) Per Share (Details Textual) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Earnings Per Share [Abstract] | ' | ' |
Antidilutive securities excluded from computation of earnings per share | 2,472,205 | 906,500 |
StockBased_Compensation_Plans_1
Stock-Based Compensation Plans (Details Textual) (USD $) | 1 Months Ended | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Nov. 01, 2013 | Dec. 31, 2013 | Dec. 31, 2012 |
Stock-based compensation plans [Abstract] | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | ' | 3,000,000 | ' |
Stock Options Under Option Plan Maximum Expiry Period | ' | '10 years | ' |
Stock Based Compensation Plans (Additional Textual) [Abstract] | ' | ' | ' |
Employee stock-based compensation expense | ' | $133 | $166 |
Granted options to purchase of common stock | ' | 1,424,216 | 322,500 |
Minimum Exercise price of options to purchase | ' | $0.22 | $0.70 |
Maximum Exercise price of options to purchase | ' | $0.48 | $0.81 |
Estimated average forfeiture rate | ' | 40.00% | 37.00% |
Unrecognized compensation expense related to stock options | ' | 326 | ' |
Weighted-average period of unrecognized compensation expense related to stock option | ' | '3 years 6 months | ' |
Number of converted common stock options to common shares | 23,000 | ' | ' |
Common Stock Options | ' | ' | ' |
Stock Based Compensation Plans (Additional Textual) [Abstract] | ' | ' | ' |
Number of converted common stock options to common shares | 46,000 | ' | ' |
Cost of Sales | ' | ' | ' |
Stock-based compensation plans [Abstract] | ' | ' | ' |
Stock based compensation including cost of good sold | ' | 11 | 20 |
Selling, General and Administrative Expenses | ' | ' | ' |
Stock-based compensation plans [Abstract] | ' | ' | ' |
Stock based compensation including cost of good sold | ' | $122 | $146 |
StockBased_Compensation_Plans_2
Stock-Based Compensation Plans (Details) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Fair value of stock option grants | ' | ' |
Weighted average expected term | '6 years 3 months | '6 years 3 months |
Weighted average volatility | 111.00% | 134.00% |
Weighted average risk-free interest rate | 1.54% | 0.80% |
Dividend yield | 0.00% | 0.00% |
StockBased_Compensation_Plans_3
Stock-Based Compensation Plans (Details 1) (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Summary of stock option activity under the option Plan | ' | ' |
Shares under option outstanding beginning balance | 1,501,500 | 1,661,750 |
Shares under option, granted | 1,424,216 | 322,500 |
Shares under option, exercised | -23,000 | -34,500 |
Shares under option, forfeited | -430,500 | -448,250 |
Shares under option outstanding ending balance | 2,472,216 | 1,501,500 |
Shares under option, exercisable ending balance | 808,623 | 810,623 |
Weighted average exercise price outstanding beginning balance | $0.95 | $0.98 |
Weighted average exercise price, granted | $0.26 | $0.74 |
Weighted average exercise price, exercised | $0.63 | $0.39 |
Weighted average exercise price, forfeited | $0.87 | $0.97 |
Weighted average exercise price outstanding ending balance | $0.57 | $0.95 |
Weighted average exercise price, exercisable ending balance | $1.05 | $1.11 |
Outstanding, weighted average exercise remaining contractual life | '8 years 1 month 6 days | '7 years |
Exercisable, weighted average exercise remaining contractual life | '5 years 4 months 24 days | '5 years 9 months 18 days |
Outstanding aggregate intrinsic value | $178 | $78 |
Exercisable aggregate intrinsic value | $5 | $50 |
StockBased_Compensation_Plans_4
Stock-Based Compensation Plans (Details 2) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Summary of status of the Company's non-vested share awards | ' |
Nonvested shares under option at January 1, 2013 | 690,877 |
Nonvested share under option, granted | 1,424,216 |
Nonvested share under option, vested | -276,250 |
Nonvested share under option, forfeited | -175,250 |
Nonvested shares under option at December 31, 2013 | 1,663,593 |
Weighted average grant date fair value at January 1, 2013 | $0.69 |
Weighted average grant date fair value, granted | $0.22 |
Weighted average grant date fair value, vested | $0.78 |
Weighted average grant date fair value, forfeited | $0.78 |
Weighted average grant date fair value at December 31, 2013 | $0.29 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Tax Credit Carryforward [Line Items] | ' | ' |
Federal | ($1,835) | $784 |
State | -79 | 117 |
Penalties and interest | 55 | 55 |
Total current tax expense | -1,859 | 956 |
Federal | -806 | -156 |
State | -60 | -12 |
Valuation allowance | 1,935 | ' |
Total deferred tax benefit | 1,069 | -168 |
Income tax (benefit) expense | ($790) | $788 |
Income_Taxes_Details_1
Income Taxes (Details 1) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Schedule of reconciliation of income tax | ' | ' |
Statutory rate | -34.00% | 34.00% |
State taxes | -3.00% | 3.00% |
Permanent differences and other | 3.00% | -4.00% |
Change in valuation allowance | 24.00% | ' |
Effective rate | -10.00% | 34.00% |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current deferred tax assets (liabilities): | ' | ' |
Accrued expenses | $65 | $130 |
Deferred rent | ' | 27 |
Accounts receivable | 671 | 673 |
Inventory | 970 | 1,113 |
Amortization | 135 | -21 |
Prepaid expenses | -99 | -67 |
Stock based compensation | 23 | ' |
Tax Credits and NOL Carryforward | 233 | ' |
Other | 9 | ' |
Gross current deferred tax assets | 2,007 | ' |
Less: Valuation allowance | -1,935 | ' |
Net current deferred tax assets | 72 | 1,855 |
Long-term deferred tax assets (liabilities): | ' | ' |
Property and equipment | -969 | -1,182 |
Deferred rent | 897 | 396 |
Net long-term deferred tax liabilities | -72 | -786 |
Net deferred tax liabilities | ' | ($786) |
Income_Taxes_Details_3
Income Taxes (Details 3) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits | ' | ' |
Unrecognized tax benefits at the beginning of the period | $67 | $60 |
Gross increases for State income tax liabilities | 127 | 7 |
Unrecognized tax benefits at the end of the period | $194 | $67 |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Income taxes (Textual) [Abstract] | ' | ' |
Statutory rate | -34.00% | 34.00% |
Net operating loss carry forwards | $5,200 | ' |
Taxes Payable, Current | 768 | ' |
Expected net income tax refund | 893 | ' |
Federal | ' | ' |
Income taxes (Textual) [Abstract] | ' | ' |
Net operating loss carry forwards | 0 | ' |
State | ' | ' |
Income taxes (Textual) [Abstract] | ' | ' |
Net operating loss carry forwards | $3,500 | ' |
Line_of_Credit_Details
Line of Credit (Details) (USD $) | 1 Months Ended | |
In Thousands, unless otherwise specified | Dec. 19, 2012 | Dec. 31, 2013 |
Line of Credit Facility [Abstract] | ' | ' |
Maximum borrowings under line of credit | ' | $7,000 |
Line of Credit (Additional Textual) [Abstract] | ' | ' |
Dollar deposits in amount | 1,000 | ' |
Base rate for variable interest rate for borrowings | 3.00% | ' |
Basis spread on variable interest rate | 6.75% | ' |
Line of credit agreement maturity notice period | '30 days | ' |
Date of Maturity | 19-Dec-14 | ' |
Dollar deposit maturity period | '1 month | ' |
RLOC | ' | ' |
Line of Credit Facility [Abstract] | ' | ' |
Maximum borrowings under line of credit | 7,000 | ' |
Interest rate description | 'LIBOR rate as published in The Wall Street Journal for dollar deposits in the amount of $1,000 with a maturity of one month or (ii) 3% per annum, plus, in each case, a margin of 6.75%. | ' |
Outstanding amount on the Credit Agreement | ' | 5,820 |
Remaining amount available for borrowing | ' | $1,071 |
Effective interest rate under the Credit Agreement | ' | 8.00% |
Interest rate | ' | 7.00% |
Fees include in effective interest rate under the credit agreement | ' | 1.00% |
Notes_Payable_and_Other_Obliga2
Notes Payable and Other Obligations (Details Textual) (USD $) | 1 Months Ended | 12 Months Ended | |
Jul. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |
Notes Payable and Other Obligations (Additional Textual) [Abstract] | ' | ' | ' |
Lease expiry year | ' | '2023-11 | ' |
Lease renewal options | ' | 'two five-year renewal options | ' |
Base monthly rent expense | ' | $129,000 | ' |
Increase in base monthly rental expense per month | ' | 3 | ' |
Increase in base monthly rental expenses per square foot | ' | 0.5 | ' |
Monthly rent expense after January 2023 | ' | 157,000 | ' |
Lease rent escalation | ' | '2023-01 | ' |
Annual rental expense | ' | 1,420,000 | ' |
Tenant allowance | ' | 1,065,000 | ' |
Allowance used for leasehold improvements | ' | 500,000 | ' |
Amount used to apply to rent in month eight and beyond | ' | 565,000 | ' |
Cost of assets under capital lease | ' | 508,000 | ' |
Accumulated depreciation | ' | 310,000 | ' |
Financing agreement | 73,000 | ' | ' |
Term of the financing | '36 months | ' | ' |
Interest rate | 2.00% | ' | ' |
Installments | 2,000 | ' | ' |
Balance of note | ' | 15,000 | ' |
Annual rental expense | ' | $1,716,000 | $1,687,000 |
Maximum | ' | ' | ' |
Notes Payable and Other Obligations (Textual) [Abstract] | ' | ' | ' |
Imputed interest rate on lease | ' | 18.00% | ' |
Minimum | ' | ' | ' |
Notes Payable and Other Obligations (Textual) [Abstract] | ' | ' | ' |
Imputed interest rate on lease | ' | 6.00% | ' |
Notes_Payable_and_Other_Obliga3
Notes Payable and Other Obligations (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Future minimum lease payments under non-cancelable notes payable, operating and capital leases | ' | ' |
2014 Notes and Capital Leases | $107 | ' |
2015 Notes and Capital Leases | 66 | ' |
2016 Notes and Capital Leases | 45 | ' |
2017 Notes and Capital Leases | 45 | ' |
Thereafter Notes and Capital Leases | 13 | ' |
Total future minimum lease payments, Notes and Capital Leases | 276 | ' |
Less amount representing interest | -34 | ' |
Present value of net minimum lease payments | 242 | ' |
Less current portion | -92 | -144 |
Notes payable and other obligations | 150 | 114 |
2014 Operating Leases | 1,114 | ' |
2015 Operating Leases | 1,588 | ' |
2016 Operating Leases | 1,626 | ' |
2017 Operating Leases | 1,663 | ' |
Thereafter Operating Leases | 10,609 | ' |
Total future minimum lease payments, Operating Lease | $16,600 | ' |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (Fair Value, Measurements, Recurring, USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Liabilities: | ' |
Contingent consideration | $7 |
Fair Value, Inputs, Level 3 | ' |
Liabilities: | ' |
Contingent consideration | $7 |
Fair_Value_Measurements_Detail1
Fair Value Measurements (Details 1) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Changes in the fair value of the Level 3 liabilities | ' | ' |
Balance at beginning | $104 | ' |
Additions | ' | 135 |
Payments | -3 | ' |
Accretion expense | 12 | 21 |
Change in fair value of contingent consideration | -106 | -52 |
Balance at end | $7 | $104 |
Fair_Value_Measurements_Detail2
Fair Value Measurements (Details Textual) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Fair Value Measurements [Abstract] | ' | ' |
Contingent payments | $3 | ' |
Changes in fair value obligation and accretion expenses | $97 | $31 |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Nov. 01, 2013 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 |
Stockholders' Equity (Textual) [Abstract] | ' | ' | ' | ' |
Restricted common stock issued | ' | 266,478 | ' | ' |
Value of restricted common stock issued | ' | $158 | ' | ' |
Issuance of common stock for option exercise, shares | ' | ' | 23,000 | 34,500 |
Issuance of common stock for option exercise | ' | ' | ' | 13 |
Issuance of common stock for cashless warrant exercise, shares | ' | ' | ' | 5,625 |
Non employee warrants exercised | ' | ' | ' | 50,000 |
Issuance of common stock for consulting services, shares | ' | ' | ' | 25,000 |
Issuance of common stock for consulting services | ' | ' | ' | $20 |
Number of converted common stock options to common shares | 23,000 | ' | ' | ' |
Sale of Stock, Price Per Share | $0.50 | ' | ' | ' |
Common Stock Options | ' | ' | ' | ' |
Stockholders' Equity (Textual) [Abstract] | ' | ' | ' | ' |
Number of converted common stock options to common shares | 46,000 | ' | ' | ' |
Concentrations_Details_Textual
Concentrations (Details Textual) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Line of Credit Facility [Abstract] | ' | ' |
Purchased electrotherapy products Percentage | 21.00% | 18.00% |
Accounts receivable received by the company from a private health insurance company | 7.00% | 22.00% |
Percentage of net revenue from medicare and medicaid programs | 3.00% | 11.00% |
Retirement_Plan_Details
Retirement Plan (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Age | ||
Retirement Plan (Textual) [Abstract] | ' | ' |
Defined contribution plan eligibility age | 18 | ' |
Defined contribution plan period of employment for eligibility | '3 months | ' |
Contribution by the company towards the plan | $0 | $0 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 1 Months Ended | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Nov. 01, 2013 | Dec. 31, 2013 | Dec. 31, 2012 |
Related Party Transactions (Textual) [Abstract] | ' | ' | ' |
Lump sum payment made under retirement agreement | ' | ' | $90 |
Consultation agreement period | ' | ' | '24 months |
Payment of Advisory fees | ' | ' | 8 |
Cancellation of consulting agreement | ' | ' | '30 days |
Consulting expense | ' | 8 | 96 |
Lump sum payment made under retirement agreement | $42 | ' | ' |
Number of converted common stock options to common shares | 23,000 | ' | ' |
Common stock option at cashless exercise price per share | $0.50 | ' | ' |
Common Stock Options | ' | ' | ' |
Related Party Transactions (Textual) [Abstract] | ' | ' | ' |
Number of converted common stock options to common shares | 46,000 | ' | ' |
Segment_Reporting_Details
Segment Reporting (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Segment Reporting Information [Line Items] | ' | ' |
Sales | $21,684 | $39,666 |
Gross profit | 13,544 | 30,896 |
Total assets | 17,221 | 25,936 |
Interest expense | 607 | 435 |
Income tax expense (benefit) | -790 | 788 |
Goodwill impairment | 251 | ' |
Intangible impairment | 160 | ' |
Reporting Segments | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Sales | 21,684 | 39,666 |
Gross profit | 13,544 | 30,896 |
Total assets | 18,330 | 25,936 |
Interest expense | 607 | 435 |
Depreciation and amortization | 839 | 912 |
Income tax expense (benefit) | -790 | 788 |
Goodwill impairment | 251 | ' |
Intangible impairment | 160 | ' |
Reporting Segments | ZMI & ZBC | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Sales | 21,184 | 39,372 |
Gross profit | 13,333 | 30,708 |
Total assets | 17,564 | 25,262 |
Interest expense | 607 | 435 |
Depreciation and amortization | 732 | 854 |
Income tax expense (benefit) | -523 | 1,264 |
Goodwill impairment | ' | ' |
Intangible impairment | ' | ' |
Reporting Segments | ZND & ZEU | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Sales | 500 | 294 |
Gross profit | 211 | 188 |
Total assets | 756 | 674 |
Interest expense | ' | ' |
Depreciation and amortization | 99 | 54 |
Income tax expense (benefit) | -72 | -236 |
Goodwill impairment | 251 | ' |
Intangible impairment | 160 | ' |
Reporting Segments | ZMS | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Sales | ' | ' |
Gross profit | ' | ' |
Total assets | 10 | ' |
Interest expense | ' | ' |
Depreciation and amortization | 8 | 4 |
Income tax expense (benefit) | -195 | -241 |
Goodwill impairment | ' | ' |
Intangible impairment | ' | ' |
Segment_Reporting_Details_Text
Segment Reporting (Details Textual) | 12 Months Ended |
Dec. 31, 2013 | |
Segment | |
Segment Reporting (Textual) [Abstract] | ' |
Number of reporting segments | 3 |