Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 07, 2015 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | ZYNEX INC | |
Entity Central Index Key | 846,475 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Trading Symbol | ZYXI | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 31,271,234 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash | $ 87 | $ 63 |
Accounts receivable, net | 2,654 | 3,189 |
Inventory, net | 1,391 | 1,935 |
Prepaid expenses | 130 | 250 |
Income tax receivable | 268 | |
Total current assets | 4,262 | 5,705 |
Property and equipment, net | 996 | 1,276 |
Deposits | 58 | 2 |
Intangible assets, net | 99 | 131 |
Total assets | 5,415 | 7,114 |
Current Liabilities: | ||
Line of credit | 4,620 | 4,442 |
Current portion of capital leases and other obligations | 83 | 78 |
Accounts payable and income taxes payable | 2,493 | 2,623 |
Deferred revenue | 0 | 112 |
Accrued expenses | 572 | 802 |
Total current liabilities | 7,768 | 8,057 |
Capital leases and other obligations, less current portion | 273 | 311 |
Warranty liability | 13 | 13 |
Total liabilities | $ 8,054 | $ 8,381 |
Stockholders’ Deficit: | ||
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, 31,271,234 shares issued and outstanding | $ 31 | $ 31 |
Paid-in capital | 5,735 | 5,702 |
Accumulated deficit | (8,323) | (6,934) |
Total Zynex, Inc. stockholders’ deficit | (2,557) | (1,201) |
Noncontrolling interest | (82) | (66) |
Total stockholders’ deficit | (2,639) | (1,267) |
Total liabilities and stockholders’ deficit | $ 5,415 | $ 7,114 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 31,271,234 | 31,271,234 |
Common stock, shares outstanding | 31,271,234 | 31,271,234 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Net revenue: | ||||
Rental | $ 517 | $ 589 | $ 844 | $ 1,324 |
Sales | 2,556 | 760 | 5,412 | 3,192 |
Total net revenue | 3,073 | 1,349 | 6,256 | 4,516 |
Operating expenses: | ||||
Cost of revenue - rental | 102 | 268 | 230 | 403 |
Cost of revenue - sales | 1,064 | 903 | 2,181 | 1,765 |
Cost of revenue - write-off of noncore inventory | 2,655 | 2,655 | ||
Selling, general and administrative expense | 2,270 | 2,947 | 4,980 | 6,403 |
Income (loss) from operations | (363) | (5,424) | (1,135) | (6,710) |
Other income (expense): | ||||
Interest expense | (138) | (144) | (270) | (302) |
Other income: | 9 | 9 | ||
Total other income (expense) | (138) | (135) | (270) | (293) |
Loss before income taxes | (501) | (5,559) | (1,405) | (7,003) |
Net loss | (501) | (5,559) | (1,405) | (7,003) |
Plus: Net loss – noncontrolling interest | 8 | 6 | 16 | 20 |
Net loss – attributable to Zynex, Inc. | $ (493) | $ (5,553) | $ (1,389) | $ (6,983) |
Net loss per share – attributable to Zynex, Inc.: | ||||
Basic | $ (0.02) | $ (0.18) | $ (0.04) | $ (0.22) |
Diluted | $ (0.02) | $ (0.18) | $ (0.04) | $ (0.22) |
Weighted - average number of common shares outstanding: | ||||
Basic | 31,271,234 | 31,171,234 | 31,271,234 | 31,171,234 |
Diluted | 31,271,234 | 31,171,234 | 31,271,234 | 31,171,234 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Stockholders' Deficit (Unaudited) - 6 months ended Jun. 30, 2015 - USD ($) $ in Thousands | Total | Common Stock | Paid-in Capital | Retained Deficit | Noncontrolling Interest |
Balance at Dec. 31, 2014 | $ (1,267) | $ 31 | $ 5,702 | $ (6,934) | $ (66) |
Balance, shares at Dec. 31, 2014 | 31,271,234 | 31,171,234 | |||
Employee stock-based compensation expense | $ 33 | 33 | |||
Net loss | (1,405) | (1,389) | (16) | ||
Balance at Jun. 30, 2015 | $ (2,639) | $ 31 | $ 5,735 | $ (8,323) | $ (82) |
Balance, shares at Jun. 30, 2015 | 31,271,234 | 31,271,234 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Net cash (used in) provided by operating activities | $ (194) | $ 727 |
Cash flows from investing activities: | ||
Sales of equipment | 142 | |
Change in inventory used for rental | 73 | 150 |
Net cash provided by investing activities | 73 | 292 |
Cash flows from financing activities: | ||
Net borrowings (repayments) on line of credit | 178 | (944) |
Payments on capital leases and other obligations | (33) | (87) |
Net cash provided by (used in) financing activities | 145 | (1,031) |
Net increase (decrease) in cash | 24 | (12) |
Cash at the beginning of the period | 63 | 323 |
Cash at the end of the period | 87 | 311 |
Supplemental cash flow information: | ||
Interest paid | 258 | 278 |
Income taxes paid (including interest and penalties) | $ 0 | $ 2 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Financial Statements and Management's Plans | 6 Months Ended |
Jun. 30, 2015 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Unaudited Condensed Consolidated Financial Statements and Management's Plans | (1) UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND MANAGEMENT’S PLANS Zynex, Inc. (a Nevada corporation) has its headquarters in Lone Tree, Colorado. The Company operates in one primary business segment, Electrotherapy and Pain Management Products. As of June 30, 2015, the Company has three active subsidiaries, Zynex Medical, Inc. (“ZMI,” a wholly-owned Colorado corporation), Zynex Monitoring Solutions Inc. (“ZMS,” a wholly-owned Colorado corporation) and Zynex Europe, ApS (“ZEU,” a wholly-owned Denmark corporation). Neither ZEU nor ZMS have generated significant revenues at this point. Beginning in April 2015, the Company stopped offering billing and consulting services to customers through its now inactive subsidiary Zynex Billing and Consulting, LLC (“ZBC,” an 80% owned Colorado limited liability company). In addition, the Company previously operated through a now inactive subsidiary Zynex NeuroDiagnostics, Inc. (“ZND,” a wholly owned Colorado corporation). The term “the Company” refers to Zynex, Inc. and its active and inactive subsidiaries. The unaudited condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included herein are adequate to make the information presented not misleading. A description of the Company’s accounting policies and other financial information is included in the audited consolidated financial statements as filed with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Amounts as of December 31, 2014, are derived from those audited consolidated financial statements. These interim condensed consolidated financial statements should be read in conjunction with the annual audited financial statements, accounting policies and notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, which has previously been filed with the SEC. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as of June 30, 2015 and the results of its operations and its cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2015, are not necessarily indicative of the results that may be achieved for a full fiscal year and cannot be used to indicate financial performance for the entire year. The accompanying unaudited 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 six months ended June 30, 2015, the Company reported a net loss of $1,389 and for the years ended December 31, 2014 and 2013, the Company reported net losses of $6,199 and $7,301, respectively, and had no available borrowing under its line of credit at June 30, 2015, although, under an interim agreement with the bank, the lender continues to make additional loans to the Company based on the Company’s cash collections. These losses and limited liquidity 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 continue as a going concern. The Company developed its operating plans for 2015 to emphasize revenue growth and cash flow. In 2015, management plans to focus its attention on increasing the number of sales representatives. Total net revenue for the six months ended June 30, 2015, was $6,256 compared to $4,516 for the six months ended June 30, 2014, an increase of 39%. Management needs to continue to reduce costs in order to reduce operating losses and increase revenue to drive the Company toward profitability. There can be no assurance that the Company will be able to achieve sufficient revenue or achieve profitability. (1) ORGANIZATION, NATURE OF BUSINESS AND MANAGEMENT’S PLANS The Company believes that as a result of the restructuring activities over the past two years, the Company’s cash flows from operating activities will be sufficient to fund the Company’s cash requirements through the next twelve months. However, there is no guarantee that the Company will be able to meet the requirements of its 2015 financial plan. The Company is not in compliance with the financial covenants under the terms of its line of credit with Triumph Healthcare Finance (the “Lender”). In July 2014, the Lender notified the Company that it would no longer make additional loans under the credit agreement and that it was exercising its default remedies under the credit agreement, including, among others, accelerating the repayment of all outstanding obligations under the Credit Agreement and collecting the Company’s bank deposits to apply towards the outstanding obligations. The Lender agreed to forbear from the exercise of its rights and remedies under the terms of the Credit Agreement through September 30, 2015 and continues to make additional loans to the Company based on the Company’s cash collections. As of August 7, 2015, the Company had approximately $4,444 of outstanding borrowings under the credit agreement. The Company and the Lender continue to negotiate the terms of an accelerated repayment of the amounts outstanding under the credit agreement and continued extension of the forbearance agreement. However, no assurance can be given that the Lender will continue to make such additional loans, or that the parties will agree on a repayment plan acceptable to the Company. The Company’s long-term business plan contemplates organic growth in revenues, through the addition of new products such as the ZMS Blood Volume Monitor that could mitigate the decline in sales of the ZMI electrotherapy products. Management believes that its cash flow projections for 2015 are achievable and that sufficient cash will be generated to meet the Company’s operating requirements for the remainder of 2015, assuming that the Lender continues to make additional loans. However, there is no guarantee that the Company will be able to meet the requirements of its 2015 cash flow projection or will be able to address its working capital shortages which increased during the six months ended June 30, 2015 to $3.5 million from $2.3 million at December 31, 2014. A principal component of the negative working capital is the line of credit which is classified as a current liability . The Company is actively seeking external financing through the issuance of debt or sale of equity, and the Company is not certain whether any such financing would be available to the Company on acceptable terms, or at all. The net losses and negative working capital may make it difficult to raise any new capital. In addition, any additional debt would require the approval of the Lender. The Company’s dependence on operating cash flow means that risks involved in the Company’s business can significantly affect the Company’s liquidity. Contingencies such as unanticipated shortfalls in revenues or increases in expenses could affect the Company’s projected revenues, cash flows from operations and liquidity, which may force the Company to curtail its operating plan or impede the Company’s ability to grow. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | (2) SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The accompanying unaudited condensed 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 USE OF ESTIMATES Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The most significant management estimates used in the preparation of the accompanying condensed 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 long-lived assets, and income taxes. (2) SIGNIFICANT ACCOUNTING POLICIES REVENUE RECOGNITION, ALLOWANCE FOR CONTRACTUAL ADJUSTMENTS AND COLLECTIBILITY 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. A significant portion of the Company’s revenues are derived, and the related receivables are due, from Third-party Payors. The nature of these receivables within the medical industry has typically resulted in long collection cycles. The process of determining what products will be reimbursed by Third-party Payors and the amounts that they will reimburse is complex and depends on conditions and procedures that vary among providers and may change from time to time. The Company maintains an allowance for contractual adjustments and 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 medical industry and the reimbursement environment in which the Company operates, estimates are required to record net revenues and accounts receivable at their net realizable values. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of third-party billing arrangements and the uncertainty of reimbursement amounts for certain products or services from payors or unanticipated requirements to refund payments previously received may result in adjustments to amounts originally recorded. Due to continuing changes in the health care industry and third-party reimbursement, as well as changes in our billing practices to increase cash collections, it is possible that management’s estimates could change in the near term, which could have an impact on our results of operations and cash flows. Any differences between estimated settlements and final determinations are reflected as an increase or a reduction to revenue in the period when such final determinations are known. The Company frequently receives refund requests from insurance providers relating to specific patients and dates of service. Billing and reimbursement disputes are very common in the Company’s industry. These requests are sometimes related to a limited number of patients or products; at other times, they include a significant number of refund claims in a single request. The Company reviews and evaluates these requests and determines if any refund request is appropriate. The Company also reviews these refund claims when it is rebilling or pursuing reimbursement from 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 June 30, 2015, 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. (2) SIGNIFICANT ACCOUNTING POLICIES 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 June 30, 2015 and December 31, 2014, the Company recorded a liability for deferred revenue in the amount of $0 and $112, respectively, which represents amounts paid by Third-party Payors for consumable supplies that were not shipped to patients as of that date. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company’s financial instruments at June 30, 2015, include cash, accounts receivable and accounts payable, for which current carrying amounts approximate fair value due to their short-term nature. Financial instruments at June 30, 2015, also include the line of credit and capitalized leases, the carrying value of which approximates fair value because the interest rates on the outstanding borrowings are at rates that approximate market rates for borrowings with similar terms and average maturities. INVENTORY 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 parties for rental or sale to patients. Total (gross) inventories at June 30, 2015, included $2,310 of finished goods, $121 of parts, and $317 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 age of the inventory. The Company had an allowance for obsolete and damaged inventory of approximately $1,357 and $916 at June 30, 2015 and December 31, 2014, respectively. The Company estimates that finished units held for sale will be reserved beginning in year three and fully reserved after four years. The Company had $173 of open purchase commitments at June 30, 2015. 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 over the useful life of the asset. As rental inventory contributes directly to the revenue generating process, the Company classifies the depreciation of rental inventory in cost of revenue. Repairs and maintenance costs are charged to expense as incurred. (2) SIGNIFICANT ACCOUNTING POLICIES INTANGIBLE ASSETS 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. Intangible assets are capitalized software. 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 expenses are 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 conditions will be achieved. RECENT ACCOUNTING PRONOUNCEMENTS In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-15 “Presentation of Financial Statements—Going Concern (Subtopic 205-40) Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. The amendments in this Update provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments in this Update are effective for the annual period ending after December 15, 2016 and for annual periods and interim periods thereafter. Early application is permitted. The Company is evaluating the effect of this updated guidance on the disclosures in the footnotes to the Company’s consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09—“Revenue from Contracts with Customers” (Topic 606) which amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This accounting guidance is effective for the Company beginning in the first quarter of fiscal year 2018, using one of two prescribed retrospective methods. Early adoption is permitted beginning in the first quarter of fiscal year 2017. The Company is evaluating the impact of the amended revenue recognition guidance on the Company’s consolidated financial statements. Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a material impact on the Company’s consolidated financial statements. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2015 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | (3) PROPERTY AND EQUIPMENT Property and equipment as of June 30, 2015 and December 31, 2014, consist of the following: June 30, December 31, Useful (UNAUDITED) Office furniture and equipment $ 917 $ 917 3-7 years Rental inventory 1,240 1,314 5 years Vehicles 76 76 5 years Leasehold improvements 104 104 2-6 years Assembly equipment 125 125 7 years 2,462 2,536 Less accumulated depreciation (1,466 ) (1,260 ) $ 996 $ 1,276 |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets | (4) INTANGIBLE ASSETS At June 30, 2015 and December 31, 2014, intangible assets consist of the following: Amortization June 30, December 31, Life Years 2015 2014 Software and development costs 5 $ 325 $ 325 Less: accumulated amortization (226 ) (194 ) Total intangible assets, net $ 99 $ 131 |
Loss Per Share
Loss Per Share | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Loss Per Share | (5) LOSS PER SHARE Basic loss per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding and the number of dilutive potential common share equivalents during the period, calculated using the treasury-stock method. The effects of potential common stock equivalents, related to outstanding options for the six months ended June 30, 2015 and 2014, totaling 1,548,000 and 1,602,394, respectively, 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. The calculation of basic and diluted loss per share for the three and six months ended June 30, 2015 and 2014 is as follows: Three months ended Six months ended June 30, June 30, 2015 2014 2015 2014 Basic: Net loss applicable to common stockholders $ (493 ) $ (5,553 ) $ (1,389 ) $ (6,983 ) Weighted average shares outstanding – basic 31,271,234 31,171,234 31,271,234 31,171,234 Net loss per share – basic $ (0.02 ) $ (0.18 ) $ (0.04 ) $ (0.22 ) Diluted: Net loss applicable to common stockholders $ (493 ) $ (5,553 ) $ (1,389 ) $ (6,983 ) Weighted average shares outstanding – basic 31,271,234 31,171,234 31,271,234 31,171,234 Dilutive securities — — — — Weighted average shares outstanding – diluted 31,271,234 31,171,234 31,271,234 31,171,234 Net loss per share – diluted $ (0.02 ) $ (0.18 ) $ (0.04 ) $ (0.22 ) |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation Plans | (6) STOCK-BASED COMPENSATION PLANS The Company has reserved 3,000,000 shares of common stock for issuance under its 2005 Stock Option Plan (the “Option Plan”). Vesting provisions 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. In the six months ended June 30, 2015 and 2014, the Company recorded compensation expense related to stock options of $33 and $55, respectively. Stock-based compensation recorded in the accompanying condensed consolidated statement of operations for the six months ended June 30, 2015 and 2014, included $2 and $4, respectively, in cost of goods sold and $31 and $51, respectively, in selling, general and administrative expenses. In the six months ended June 30, 2015, the Company granted options to purchase up to 364,000 shares of common stock to employees at a weighted average exercise price of $0.49. The Company used the Black Scholes option pricing model to determine the fair value of stock option grants, using the following assumptions during the six months ended June 30, 2015: 2014 Weighted average expected term 6.25 years Weighted average volatility 138% Weighted average risk-free interest rate 1.0% Dividend yield 0% A summary of stock option activity under the Option Plan for the six months ended June 30, 2015, is presented below: Shares Weighted Weighted Aggregate Outstanding at January 1, 2015 1,735,519 $ 0.59 Granted 364,000 $ 0.49 Exercised — Forfeited (551,019 ) $ 1.84 Outstanding at June 30, 2015 1,548,000 $ 0.50 6.8 years $ — Exercisable at June 30, 2015 596,546 $ 0.70 5.8 years $ — A summary of status of the Company’s non-vested share awards as of and for the six months ended June 30, 2015, is presented below: Nonvested Shares Weighted Average Non-vested at January 1, 2015 945,940 $ 0.29 Granted 364,000 $ 0.14 Vested (125,753 ) $ 0.38 Forfeited (232,733 ) $ 0.71 Non-vested at June 30, 2015 951,454 $ 0.27 As of June 30, 2015, the Company had approximately $119 of unrecognized compensation expense related to stock options that will be recognized over a weighted average period of approximately 2.19 years. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (7) INCOME TAXES The provision for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year. The Company’s effective income tax rate was 0% |
Line of Credit
Line of Credit | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Line of Credit | (8) LINE OF CREDIT The Company has an asset-backed revolving credit facility under a Loan and Security Agreement as amended, (the “Triumph Agreement”) with Triumph Healthcare Finance, a division of Triumph Community Bank (the “Lender”). The Triumph Agreement contains certain customary restrictive and financial covenants for asset-backed credit facilities. As of June 30, 2015, the Company was not in compliance with the financial covenants under the Triumph Agreement. On July 14, 2014, the Company received notice from the Lender of an event of default under the Triumph Agreement. The notice relates to the Company’s default under the minimum debt service coverage ratio requirement for the quarter ended March 31, 2014 and certain other alleged defaults. The Lender notified the Company that it was exercising its default remedies under the Triumph Agreement, including, among others, accelerating the repayment of all outstanding obligations under the Triumph Agreement (outstanding principal and accrued interest) and collecting the Company’s bank deposits to apply towards the outstanding obligations. The Lender agreed to forbear from the exercise of its rights and remedies under the terms of the credit agreement through September 30, 2015 and continues to make additional loans to the Company based on the Company’s cash collections. The Company and the Lender continue to negotiate the terms of an accelerated repayment of the amounts outstanding under the credit agreement and continued extension of the forbearance agreement. However, no assurance can be given that the Lender will continue to make such additional loans, or that the parties will agree on a repayment plan acceptable to the Company. If the Lender insists upon immediate repayment, the Company will be insolvent and may be forced to seek protection from creditors. As of June 30, 2015, $4,620 was outstanding under the Triumph Agreement and zero was available for borrowing based on the default status. Borrowings under the Triumph Agreement bear interest at the default interest rate. As of June 30, 2015, the effective interest rate under the Triumph Agreement was 10.87% (7.43% interest rate plus 3% additional default interest rate and 0.44% fees). The Triumph Agreement requires monthly interest payments in arrears on the first date of each month. The Triumph Agreement matured on December 19, 2014, however, Triumph agreed to forbear from the exercise of its rights and remedies under the terms of the Credit Agreement through September 30, 2015, pursuant to the terms of a forbearance agreement, as amended. The Triumph Agreement requires a lockbox arrangement whereby all receipts are swept daily to reduce borrowings outstanding. |
Concentrations
Concentrations | 6 Months Ended |
Jun. 30, 2015 | |
Risks And Uncertainties [Abstract] | |
Concentrations | (9) CONCENTRATIONS The Company sourced approximately 28% and 19% of components for its electrotherapy products from one vendor during the six months ended June 30, 2015 and 2014, respectively. Management believes that its relationships with suppliers are good; however, the Company has delayed and extended payments to many of its vendors for cash flow reasons, which has caused many of its vendors to require pre-payment for products or services. 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 a private health insurance carrier at June 30, 2015 and December 31, 2014, that made up approximately 9% and 10%, respectively, of the net accounts receivable balance. |
Litigation
Litigation | 6 Months Ended |
Jun. 30, 2015 | |
Commitments And Contingencies Disclosure [Abstract] | |
Litigation | (10) LITIGATION From time to time, the Company may become party to litigation and other claims in the ordinary course of business. To the extent that such claims and litigation arise, management would provide for them if losses are determined to be both probable and estimable. The Company is currently not a party to any material pending legal proceedings. |
Capital Leases and Other Obliga
Capital Leases and Other Obligations | 6 Months Ended |
Jun. 30, 2015 | |
Payables And Accruals [Abstract] | |
Capital Leases and Other Obligations | (11) CAPITAL LEASES AND OTHER OBLIGATIONS Effective January 1, 2015, the Company commenced a new Lease Agreement (“LA”) with its landlord relating to the Company’s headquarters location in Lone Tree, Colorado. The following is a summary of the key terms of the LA: · The term of the LA is two years ending, unless sooner terminated, December 31, 2016; · Fixed rental payments of $49 per month; and · The Company and landlord shall each have the right to terminate the lease at any time, without liability to the other, with six months prior written notice to the Company and three months written notice to the Landlord. The Company also leases certain equipment under capital leases which expire on various dates through 2018. Imputed interest rates on the leases range from approximately 6% to 18%. At June 30, 2015, the total recorded cost of assets under capital leases was approximately $461. Accumulated depreciation related to these assets totals approximately $151. |
Significant Accounting Polici18
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | PRINCIPLES OF CONSOLIDATION The accompanying unaudited condensed 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 |
Use of Estimates | USE OF ESTIMATES Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The most significant management estimates used in the preparation of the accompanying condensed 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 long-lived assets, and income taxes. |
Revenue Recognition and Allowances for Provider Discounts and Collectability | REVENUE RECOGNITION, ALLOWANCE FOR CONTRACTUAL ADJUSTMENTS AND COLLECTIBILITY 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. A significant portion of the Company’s revenues are derived, and the related receivables are due, from Third-party Payors. The nature of these receivables within the medical industry has typically resulted in long collection cycles. The process of determining what products will be reimbursed by Third-party Payors and the amounts that they will reimburse is complex and depends on conditions and procedures that vary among providers and may change from time to time. The Company maintains an allowance for contractual adjustments and 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 medical industry and the reimbursement environment in which the Company operates, estimates are required to record net revenues and accounts receivable at their net realizable values. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of third-party billing arrangements and the uncertainty of reimbursement amounts for certain products or services from payors or unanticipated requirements to refund payments previously received may result in adjustments to amounts originally recorded. Due to continuing changes in the health care industry and third-party reimbursement, as well as changes in our billing practices to increase cash collections, it is possible that management’s estimates could change in the near term, which could have an impact on our results of operations and cash flows. Any differences between estimated settlements and final determinations are reflected as an increase or a reduction to revenue in the period when such final determinations are known. The Company frequently receives refund requests from insurance providers relating to specific patients and dates of service. Billing and reimbursement disputes are very common in the Company’s industry. These requests are sometimes related to a limited number of patients or products; at other times, they include a significant number of refund claims in a single request. The Company reviews and evaluates these requests and determines if any refund request is appropriate. The Company also reviews these refund claims when it is rebilling or pursuing reimbursement from 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 June 30, 2015, 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. (2) SIGNIFICANT ACCOUNTING POLICIES 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 June 30, 2015 and December 31, 2014, the Company recorded a liability for deferred revenue in the amount of $0 and $112, respectively, which represents amounts paid by Third-party Payors for consumable supplies that were not shipped to patients as of that date. |
Fair Value of Financial Instruments | FAIR VALUE OF FINANCIAL INSTRUMENTS The Company’s financial instruments at June 30, 2015, include cash, accounts receivable and accounts payable, for which current carrying amounts approximate fair value due to their short-term nature. Financial instruments at June 30, 2015, also include the line of credit and capitalized leases, the carrying value of which approximates fair value because the interest rates on the outstanding borrowings are at rates that approximate market rates for borrowings with similar terms and average maturities. |
Inventory | INVENTORY 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 parties for rental or sale to patients. Total (gross) inventories at June 30, 2015, included $2,310 of finished goods, $121 of parts, and $317 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 age of the inventory. The Company had an allowance for obsolete and damaged inventory of approximately $1,357 and $916 at June 30, 2015 and December 31, 2014, respectively. The Company estimates that finished units held for sale will be reserved beginning in year three and fully reserved after four years. The Company had $173 of open purchase commitments at June 30, 2015. |
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 over the useful life of the asset. As rental inventory contributes directly to the revenue generating process, the Company classifies the depreciation of rental inventory in cost of revenue. Repairs and maintenance costs are charged to expense as incurred. |
Intangible Assets | INTANGIBLE ASSETS 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. Intangible assets are capitalized software. 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 expenses are 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 conditions will be achieved. |
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-15 “Presentation of Financial Statements—Going Concern (Subtopic 205-40) Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. The amendments in this Update provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments in this Update are effective for the annual period ending after December 15, 2016 and for annual periods and interim periods thereafter. Early application is permitted. The Company is evaluating the effect of this updated guidance on the disclosures in the footnotes to the Company’s consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09—“Revenue from Contracts with Customers” (Topic 606) which amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This accounting guidance is effective for the Company beginning in the first quarter of fiscal year 2018, using one of two prescribed retrospective methods. Early adoption is permitted beginning in the first quarter of fiscal year 2017. The Company is evaluating the impact of the amended revenue recognition guidance on the Company’s consolidated financial statements. Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a material impact on the Company’s consolidated financial statements. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | Property and equipment as of June 30, 2015 and December 31, 2014, consist of the following: June 30, December 31, Useful (UNAUDITED) Office furniture and equipment $ 917 $ 917 3-7 years Rental inventory 1,240 1,314 5 years Vehicles 76 76 5 years Leasehold improvements 104 104 2-6 years Assembly equipment 125 125 7 years 2,462 2,536 Less accumulated depreciation (1,466 ) (1,260 ) $ 996 $ 1,276 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Acquisition of Intangible Assets | At June 30, 2015 and December 31, 2014, intangible assets consist of the following: Amortization June 30, December 31, Life Years 2015 2014 Software and development costs 5 $ 325 $ 325 Less: accumulated amortization (226 ) (194 ) Total intangible assets, net $ 99 $ 131 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Calculation of Basic and Diluted Loss Per Share | The calculation of basic and diluted loss per share for the three and six months ended June 30, 2015 and 2014 is as follows: Three months ended Six months ended June 30, June 30, 2015 2014 2015 2014 Basic: Net loss applicable to common stockholders $ (493 ) $ (5,553 ) $ (1,389 ) $ (6,983 ) Weighted average shares outstanding – basic 31,271,234 31,171,234 31,271,234 31,171,234 Net loss per share – basic $ (0.02 ) $ (0.18 ) $ (0.04 ) $ (0.22 ) Diluted: Net loss applicable to common stockholders $ (493 ) $ (5,553 ) $ (1,389 ) $ (6,983 ) Weighted average shares outstanding – basic 31,271,234 31,171,234 31,271,234 31,171,234 Dilutive securities — — — — Weighted average shares outstanding – diluted 31,271,234 31,171,234 31,271,234 31,171,234 Net loss per share – diluted $ (0.02 ) $ (0.18 ) $ (0.04 ) $ (0.22 ) |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Fair Value of Stock Options Grants | The Company used the Black Scholes option pricing model to determine the fair value of stock option grants, using the following assumptions during the six months ended June 30, 2015: 2014 Weighted average expected term 6.25 years Weighted average volatility 138% Weighted average risk-free interest rate 1.0% Dividend yield 0% |
Summary of Stock Option Activity Under the Option Plan | A summary of stock option activity under the Option Plan for the six months ended June 30, 2015, is presented below: Shares Weighted Weighted Aggregate Outstanding at January 1, 2015 1,735,519 $ 0.59 Granted 364,000 $ 0.49 Exercised — Forfeited (551,019 ) $ 1.84 Outstanding at June 30, 2015 1,548,000 $ 0.50 6.8 years $ — Exercisable at June 30, 2015 596,546 $ 0.70 5.8 years $ — |
Summary of Status of the Company's Non-Vested Shares Under Option | A summary of status of the Company’s non-vested share awards as of and for the six months ended June 30, 2015, is presented below: Nonvested Shares Weighted Average Non-vested at January 1, 2015 945,940 $ 0.29 Granted 364,000 $ 0.14 Vested (125,753 ) $ 0.38 Forfeited (232,733 ) $ 0.71 Non-vested at June 30, 2015 951,454 $ 0.27 |
Unaudited Condensed Consolida23
Unaudited Condensed Consolidated Financial Statements and Management's Plans (Details Textual) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2015USD ($)subsidiary | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)subsidiary | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Aug. 07, 2015USD ($) | |
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||||||
Number of active subsidiaries | subsidiary | 3 | 3 | |||||
Net (loss) income | $ (493,000) | $ (5,553,000) | $ (1,389,000) | $ (6,983,000) | $ (6,199,000) | $ (7,301,000) | |
Line of credit current borrowing capacity | 0 | 0 | |||||
Total net revenue | $ 3,073,000 | $ 1,349,000 | $ 6,256,000 | $ 4,516,000 | |||
Percentage increase in net revenue | 39.00% | ||||||
Increase decrease in working capital | $ 3,500,000 | $ 2,300,000 | |||||
Subsequent Event | |||||||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||||||
Line of Credit | $ 4,444,000 | ||||||
ZBC | |||||||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||||||
Equity Method Investment, Ownership Percentage | 80.00% | 80.00% |
Significant Accounting Polici24
Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Accounting Policies [Abstract] | ||
Equity and Noncontrolling interest | 20.00% | |
Allowance for uncollectible accounts receivable | $ 586 | $ 936 |
Deferred revenue | 0 | 112 |
Inventory finished goods | 2,310 | |
Inventory parts | 121 | |
Inventory supplies | 317 | |
Reserve for obsolete and damaged inventory | $ 1,357 | $ 916 |
Increase in reserve for obsolete and damaged inventory | The Company estimates that finished units held for sale will be reserved beginning in year three and fully reserved after four years. | |
Open purchase commitments | $ 173 | |
Software and development costs | 5 years |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Property Plant And Equipment [Line Items] | ||
Property and Equipment, Gross | $ 2,462 | $ 2,536 |
Less accumulated depreciation | (1,466) | (1,260) |
Property and Equipment, Net | 996 | 1,276 |
Office furniture and equipment | ||
Property Plant And Equipment [Line Items] | ||
Property and Equipment, Gross | $ 917 | 917 |
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 | $ 1,240 | 1,314 |
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 | $ 104 | 104 |
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 | $ 125 | $ 125 |
Property and Equipment, Useful Life | 7 years |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Acquisition of intangible assets | ||
Software and development costs | 5 years | |
Total intangible assets, gross | $ 325 | $ 325 |
Less: accumulated amortization | (226) | (194) |
Total intangible assets, net | $ 99 | $ 131 |
Loss Per Share (Details Textual
Loss Per Share (Details Textual) - shares | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share | 1,548,000 | 1,602,394 |
Loss Per Share (Details)
Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Basic: | ||||||
Net loss applicable to common stockholders | $ (493) | $ (5,553) | $ (1,389) | $ (6,983) | $ (6,199) | $ (7,301) |
Weighted average shares outstanding – basic | 31,271,234 | 31,171,234 | 31,271,234 | 31,171,234 | ||
Net loss per share – basic | $ (0.02) | $ (0.18) | $ (0.04) | $ (0.22) | ||
Diluted: | ||||||
Net loss applicable to common stockholders | $ (493) | $ (5,553) | $ (1,389) | $ (6,983) | $ (6,199) | $ (7,301) |
Weighted average shares outstanding – basic | 31,271,234 | 31,171,234 | 31,271,234 | 31,171,234 | ||
Diluted | 31,271,234 | 31,171,234 | 31,271,234 | 31,171,234 | ||
Net loss per share – diluted | $ (0.02) | $ (0.18) | $ (0.04) | $ (0.22) |
Stock-Based Compensation Plan29
Stock-Based Compensation Plans (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 3,000,000 | |
Stock Options Under Option Plan Maximum Expiry Period | 10 years | |
Employee stock-based compensation expense | $ 33 | $ 55 |
Shares under option, granted | 364,000 | |
Weighted average exercise price, granted | $ 0.49 | |
Unrecognized compensation expense related to stock options | $ 119 | |
Weighted-average period of unrecognized compensation expense related to stock option | 2 years 2 months 9 days | |
Cost of Sales | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Employee stock-based compensation expense | $ 2 | 4 |
Selling, General and Administrative Expenses | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Employee stock-based compensation expense | $ 31 | $ 51 |
Stock-Based Compensation Plan30
Stock-Based Compensation Plans (Details) - 6 months ended Jun. 30, 2015 | Total |
Fair value of stock option grants | |
Weighted average expected term | 6 years 3 months |
Weighted average volatility | 138.00% |
Weighted average risk-free interest rate | 1.00% |
Dividend yield | 0.00% |
Stock-Based Compensation Plan31
Stock-Based Compensation Plans (Details 1) - Jun. 30, 2015 - $ / shares | Total |
Summary of stock option activity under the option Plan | |
Shares under option outstanding beginning balance | 1,735,519 |
Shares under option, granted | 364,000 |
Shares under option, forfeited | (551,019) |
Shares under option outstanding ending balance | 1,548,000 |
Shares under option, exercisable ending balance | 596,546 |
Weighted average exercise price outstanding beginning balance | $ 0.59 |
Weighted average exercise price, granted | 0.49 |
Weighted average exercise price, forfeited | 1.84 |
Weighted average exercise price outstanding ending balance | 0.50 |
Weighted average exercise price, exercisable ending balance | $ 0.70 |
Outstanding, weighted average exercise remaining contractual life | 6 years 9 months 18 days |
Exercisable, weighted average exercise remaining contractual life | 5 years 9 months 18 days |
Stock-Based Compensation Plan32
Stock-Based Compensation Plans (Details 2) - 6 months ended Jun. 30, 2015 - $ / shares | Total |
Summary of status of the Company's non-vested share awards | |
Non-vested shares under option at January 1, 2015 | 945,940 |
Shares under option, granted | 364,000 |
Non-vested share under option, vested | (125,753) |
Non-vested share under option, forfeited | (232,733) |
Non-vested shares under option at June 30, 2015 | 951,454 |
Weighted average grant date fair value at January 1, 2015 | $ 0.29 |
Weighted average grant date fair value, granted | 0.14 |
Weighted average grant date fair value, vested | 0.38 |
Weighted average grant date fair value, forfeited | 0.71 |
Weighted average grant date fair value at June 30, 2015 | $ 0.27 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||||
Statutory rate | 0.00% | 0.00% | 0.00% | 0.00% | |
Deferred tax assets related to net operating loss carryforwards | $ 556 | ||||
Income taxes paid (including interest and penalties) | 0 | $ 2 | |||
State tax refunds | $ 268 | ||||
Income tax receivable | $ 268 |
Line of Credit (Details Textual
Line of Credit (Details Textual) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Line of Credit Facility [Abstract] | ||
Line of credit | $ 4,620 | $ 4,442 |
Date of Maturity | Dec. 19, 2014 | |
Revolving Credit Facility | ||
Line of Credit Facility [Abstract] | ||
Line of credit | $ 4,620 | |
Remaining amount available for borrowing | $ 0 | |
Effective interest rate under the Credit Agreement | 10.87% | |
Interest rate | 7.43% | |
Additional default interest rate | 3.00% | |
Fees include in effective interest rate under the credit agreement | 0.44% |
Concentrations (Details Textual
Concentrations (Details Textual) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Raw materials | Electrotherapy products | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 28.00% | 19.00% | |
Net accounts receivable | Credit Concentration Risk | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 9.00% | 10.00% |
Capital Leases and Other Obli36
Capital Leases and Other Obligations (Details Textual) - Jun. 30, 2015 - USD ($) $ in Thousands | Total |
Assembly equipment | |
Debt Instrument [Line Items] | |
Cost of assets under capital lease | $ 461 |
Accumulated depreciation | $ 151 |
Maximum | |
Debt Instrument [Line Items] | |
Imputed interest rate on lease | 18.00% |
Minimum | |
Debt Instrument [Line Items] | |
Imputed interest rate on lease | 6.00% |
Revised from September 1, 2014 through December 31, 2014 | |
Debt Instrument [Line Items] | |
Lease Commencement Date | Jan. 1, 2015 |
Lease term | 2 years |
Fixed rental payments for each month | $ 49 |
Revised from September 1, 2014 through December 31, 2014 | Maximum | |
Debt Instrument [Line Items] | |
Lease termination date | Dec. 31, 2016 |