v2.4.0.8
Document and Entity Information Document
 6 Months Ended
Jun. 30, 2013
Oct. 03, 2013
Document Information [Line Items]    
Entity Registrant Name Arrhythmia Research Technology Inc /DE/  
Entity Central Index Key 0000819689  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Document Type 10-Q  
Document Period End Date Jun. 30, 2013  
Document Fiscal Year Focus 2013  
Document Fiscal Period Focus Q2  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   2,704,239
v2.4.0.8
Consolidated Balance Sheets (USD $)
Jun. 30, 2013
Dec. 31, 2012
Current assets:    
Cash and cash equivalents $ 312,912 $ 477,708
Restricted Cash 1,000,000 0
Trade and othe accounts receivable, net of allowance for doubtful accounts of $40,000 and $117,098, respectively 3,298,437 3,181,721
Inventories, net 2,451,209 2,415,104
Deferred income taxes 0 199,432
Income tax receivable 127,961 194,912
Deposits, prepdaid expenses and other current assets 509,512 574,999
Current assets from discontinued operations 2,495 34,301
Total current assets 7,702,526 7,078,177
Property, plant and equipment, net 7,415,035 7,158,512
Other intangible assets, net 188,347 156,091
Long-term deferred tax assets, net 0 2,068,538
Other non-current assets 309,154 214,596
Non-current assets from discontinued operations 0 284,300
Total assets 15,615,062 16,960,214
Current liabilities:    
Line of credit 2,174,493 800,000
Current portion of long-term debt 277,052 0
Current portion of equipment notes 50,516 267,043
Accounts payable 2,225,785 2,437,778
Accrued expenses 775,765 393,913
Customer deposits 4,855 121,779
Deferred revenue 292,485 315,268
Performance guarantee liability 1,000,000 1,000,000
Current liabilities from discontinued operations 322,262 600,571
Total current liabilities 7,123,213 5,936,352
Long-term liabilities:    
Long-term debt, net of current portion 1,177,905 0
Long-term equipment note, net of current portion 196,539 991,213
Long-term portion of deferred gain on lease 0 8,934
Long-term deferred revenue 288,787 326,982
Total long-term liabilities 1,663,231 1,327,129
Total liabilties 8,786,444 7,263,481
Shareholders’ equity:    
Preferred stock, $1 par value; 2,000,000 shares authorized, none issued 0 0
Common stock, $0.01 par value; 10,000,000 shares authorized, 3,926,491 shares issued, 2,704,239 shares outstanding 39,265 39,265
Additional paid-in-capital 11,138,321 11,110,575
Common stock held in treasury, 1,222,252 shares at cost (3,335,268) (3,335,268)
Accumulated other comprehensive income from foreign currency translation 42,502 42,502
(Accumulated deficit) retained earnings (1,056,202) 1,839,659
Total shareholders' equity 6,828,618 9,696,733
Total liabilities and shareholders' equity $ 15,615,062 $ 16,960,214
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Consolidated Balance Sheet Parenthetical (Parentheticals) (USD $)
Jun. 30, 2013
Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Allowance for Doubtful Accounts Receivable $ 40,000 $ 117,098
Preferred stock, par value $ 1 $ 1
Preferred stock, shares authorized 2,000,000 2,000,000
Preferred Stock, Shares Issued 0 0
Common Stock, Par or Stated Value per Share $ 0.01 $ 0.01
Common Stock, Shares Authorized 10,000,000 10,000,000
Common Stock, Shares, Issued 3,926,491 3,926,491
Common Stock, Shares, Outstanding 2,704,239 2,790,514
Treasury Stock, Shares 1,222,252 1,222,252
v2.4.0.8
Consolidated Statements of Operations (USD $)
 3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Net revenues $ 4,880,445 $ 4,794,501 $ 10,523,634 $ 10,626,123
Cost of sales 4,322,779 4,165,026 9,013,820 8,686,587
Gross profit 557,666 629,475 1,509,814 1,939,536
Selling and marketing 246,839 267,504 487,214 506,094
General and administrative 585,345 727,916 1,309,475 1,420,572
Research and development 61,293 131,823 120,695 265,232
Total operating expense 893,477 1,127,243 1,917,384 2,191,898
Loss from operations (335,811) (497,768) (407,570) (252,362)
Interest expense (196,999) (7,110) (207,545) (6,886)
Other income (expense), net 7,905 (68) 7,769 (7,920)
Other expense (189,094) (7,178) (199,776) (14,806)
Loss from continuing operations before income tax benefit (524,905) (504,946) (607,346) (267,168)
Income tax provision (benefit) 2,352,478 (217,150) 2,267,969 (313,490)
(Loss) income from continuing operations (2,877,383) (287,796) (2,875,315) 46,322
Discontined Operations:        
Loss from discontinued operations, net of tax benefit of $3,055 and $8,086, respectively, for the three and six months ended June 30, 2013 and $334,000 and $541,000, respectively for the three and six months ended June 30, 2012 (12,808) (757,287) (20,546) (1,527,325)
Net loss $ (2,890,191) $ (1,045,083) $ (2,895,861) $ (1,481,003)
(Loss) income per share - basic and diluted        
Continuing operations $ (1.06) $ (0.10) $ (1.06) $ 0.02
Discontinued operations $ 0.00 $ (0.27) $ (0.01) $ (0.55)
(Loss) income per share - basic and diluted $ (1.06) $ (0.37) $ (1.07) $ (0.53)
Weighted average common shares outstanding - basic and diluted 2,704,239 2,790,514 2,704,239 2,790,514
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Consolidated Statements of Operations Parenthetical (Parentheticals) (USD $)
 3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Income Tax Expense (Benefit) $ 3,055 $ 334,000 $ 0 $ 541,000
Income tax benefit, discontinued operations   $ 334,000 $ 0 $ 541,000
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Statement of Changes in Shareholders' Equity (USD $)
Total
Common Stock
Additional Paid-in Capital
Treasury Stock
Accumulated other comprehensive income
Retained Earnings
Stockholders' Equity Attributable to Parent at Dec. 31, 2012 $ 9,696,733 $ 39,265 $ 11,110,575 $ (3,335,268) $ 42,502 $ 1,839,659
Shares at Dec. 31, 2012 3,926,491 3,926,491   1,222,252    
Share-based compensation 27,746   27,746      
Net loss (2,895,861)         (2,895,861)
Stockholders' Equity Attributable to Parent at Jun. 30, 2013 $ 6,828,618 $ 39,265 $ 11,138,321 $ (3,335,268) $ 42,502 $ (1,056,202)
Shares at Jun. 30, 2013 3,926,491 3,926,491   1,222,252    
v2.4.0.8
Consolidated Statements of Cash Flows (USD $)
 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Cash flows from operating activities:    
Net loss $ (2,895,861) $ (1,481,003)
Loss from discontinued operations 20,546 1,527,325
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:    
Amortization of the gain on lease (8,934) (2,234)
Depreciation and amortization 697,023 703,057
Provision for doubtful accounts (77,098) 30,000
Deferred income taxes 2,267,969 (308,990)
Share-based compensation 27,746 64,502
Changes in operating assets and liabilities:    
Trade accounts receivable (39,618) 642,334
Inventories (36,105) (298,520)
Deposits, prepaid expenses and other assets 132,438 (656,957)
Other non-current assets (94,558) (193,511)
Accounts payable (211,992) 387,609
Accrued expenses and other current liabilities 242,612 (242,402)
Other non-current liabilities (38,195) 262,229
Net cash (used in) provided by operating activities of continuing operations (14,027) 433,439
Net cash used in operating activities of discontinued operations (310,301) (1,766,502)
Net cash used in operating activities (324,328) (1,333,063)
Cash flows from investing activities:    
Purchases of property, plant and equipment (703,737) (786,192)
Proceeds from sale of fixed asset 0 303,885
Cash paid for patents and trademarks (31,385) 0
Net cash used in investing activities of continuing operations (735,122) (482,307)
Net cash provided by (used in) investing activities of discontinued operations 320,518 (516,602)
Net cash used in investing activities (414,604) (998,909)
Cash flows from financing activities:    
Proceeds from line of credit, net 1,374,493 500,000
Proceeds from long-term debt 1,500,000 0
Payments on long-term debt (45,043) 0
Proceeds from equipment notes 0 262,960
Payments on equipment notes (1,228,699) (23,949)
Cash dividend paid 0 (84,119)
Restricted cash (1,000,000) 0
Net cash provided by financing activities of continuing operations 600,751 654,892
Net cash (used in) provided by financing activities of discontinued operations (55,002) 672,272
Net cash provided by financing activities 545,749 1,327,164
Net decrease in cash and cash equivalents (193,183) (1,004,808)
Cash and cash equivalents at beginning of period 508,590 1,358,223
Cash and cash equivalents at end of period 315,407  
Less cash and cash equivalents of discontinued operations at end of period (2,495) (70,824)
Cash and cash equivalents of continuing operations at end of period $ 312,912 $ 282,591
v2.4.0.8
Note 1. Basis of Presentation
 6 Months Ended
Jun. 30, 2013
Basis of Presentation [Abstract]  
Basis of Presentation
Basis of Presentation
The unaudited interim consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC").  Accordingly, certain information and footnote disclosures normally included in complete financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been omitted pursuant to such rules and regulations.  The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Arrhythmia Research Technology, Inc. ("ART") and subsidiaries (the “Company”) Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on May 31, 2013.
The information presented reflects, in the opinion of the management of the Company, all adjustments necessary for a fair presentation of the financial results for the interim periods presented.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Operating results for interim periods are not necessarily indicative of results that may be expected for the entire fiscal year.
Operating matters and liquidity
The Company's loss reported for the three months ended June 30, 2013 resulted in a twelve quarter cumulative loss including the discontinued operations of WirelessDx. The Company has outstanding balances of $2,174,493 under its line of credit and $1,454,957 under a commercial term loan with a bank at June 30, 2013. Borrowings under the line of credit have a maturity date of June 30, 2015. The commercial term loan has a maturity date of March 29, 2018. The Company also has $247,055 in equipment notes under a master lease agreement with a financing company.
The Company expects that its current and anticipated financial resources, including a new bank facility, are adequate to maintain current and planned operations through June 30, 2014. The new multi-year credit facility entered into on March 29, 2013, includes a revolving line of credit ("revolver") of up to $4.0 million, a commercial term loan of $1.5 million and an equipment line of credit of $1.0 million. At June 30, 2013, the Company had approximately $522,000 ($300,000 estimated at September 30, 2013) of available borrowing capacity on this revolver.
However, if the Company is not successful in generating sufficient revenues, it may not be able to fund its debt obligations or fund operations beyond June 30, 2014. The Company expects to continue to expand its product offerings and improve sales within new and existing channels. The Company expects to meet its goals in these areas and generate the additional cash needed to fund operations into 2014 and beyond; however, there can be no assurance that the Company will be able to do so. The ability of the Company to realize the carrying value of its assets depends on its ability to successfully execute the Company's long-term business plan.
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Note 2. Accounting Policies (Notes)
 6 Months Ended
Jun. 30, 2013
Accounting Policies [Abstract]  
Accounting Policies
Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of ART and its wholly owned subsidiary, Micron Products, Inc. ("Micron"). The Company's Pennsylvania subsidiary, RMDDxUSA Corp., and its Prince Edward Island subsidiary, RMDDx Corporation, collectively "WirelessDx", discontinued operations in the third quarter of 2012 and are presented herein as discontinued operations. All intercompany balances and transactions have been eliminated in consolidation.
Revenue Recognition
Revenue is recorded when all criteria for revenue recognition have been satisfied, which is generally when goods are shipped to the Company's customers. Product revenue is recognized in the period when persuasive evidence of an arrangement with a customer exists, the products are shipped and title has transferred to the customer, the price is fixed or determined and collection is probable.
The Company defers revenue recognition on the sale of certain molds and tools, as well as certain engineering and validation services (collectively "Tooling"), until customer acceptance, including inspection and installation requirements, as defined, are achieved. The Company evaluates arrangements with potential multiple elements to determine if there is more than one unit of accounting.
The Company enters into arrangements containing multiple elements which may include a combination of the sale of molds, tooling, engineering and validation services and production units. The Company has determined that sale of certain molds, tooling, engineering and validation services, and the production units, represent one unit of accounting, based on an assessment of the respective standalone value, as defined in ASC 605-25, “Revenue Recognition: Multiple - Element Arrangements.”
The Company evaluates the merits and individual uniqueness of each transaction, the related product(s), and the customer, to determine if the arrangement qualifies for revenue recognition as multiple element arrangements. The Company determined that the estimated product life-cycle, and historical knowledge of the customer will determine the appropriate life over which the deferred revenue will be amortized into revenue, which generally takes place within two to five years of the initiation of the arrangement. Revenue for the production units is recognized upon shipment.
The Company cannot adequately predict short-term or long-term future production units in a consistent and meaningful manner given the prototyping and sampling nature of these molds and associated products. Many of these products require validation of a new design or acceptable end product and their viability in their respective competitive marketplaces. Therefore, the future production possibilities are unpredictable and sometimes volatile making the Company unable to account for the transactions under the Units of Production method. Therefore, management has determined that the most appropriate method of amortizing the amounts into revenue is the straight-line method. Furthermore, the Company will use these factors in determining when it may be appropriate to accelerate remaining deferred revenue into income for products sold to customers who may have excessive time lags between the making of the mold and the production of units from the mold.
In connection with the preparation of the consolidated financial statements for the year ended December 31, 2012, the Company reviewed the accounting treatment of revenue recognition for certain Tooling transactions and their relation to molding or machining of production units for sale to the customer. As a result of such review, management determined that the Company had been incorrectly recognizing revenue for certain Tooling transactions by not deferring the related revenue in accordance with guidance set forth in ASC 605-25, “Revenue Recognition: Multiple - Element Arrangements.”
The Company determined that the errors were not material individually or in the aggregate to the overall presentation of any of the prior reporting periods, and therefore, amendments of previously filed reports were not required. However, the Company revised prior years as more fully described in the Company's Annual Report on Form 10-K for the year ended December 31, 2012. As such, the statement of operations, statement of cash flows and the applicable notes to the consolidated financial statements for the three and six months ended June 30, 2012, included in this Form 10-Q, have been revised to reflect the correction of these errors as more fully described in Note 11.
The Company also recognizes revenue in accordance with ASC 985-605 "Software - Revenue Recognition" for software licenses it sells. Revenue is recognized when licenses are sold as the revenue cycle is completed with no warranty, returns or technical support to customers. Total revenue from software sales was immaterial in relation to consolidated revenues.
Fair value of financial instruments
The carrying amount reported in the balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the immediate or short-term nature of such instruments.
The Company had lines of credit with outstanding balances of $2,174,493 and $800,000 at June 30, 2013 and December 31, 2012, respectively, which approximates the fair value of these instruments due to the variable interest rates.
The carrying amount of the Company's long-term debt in the form of a commercial term loan was $1,177,905, net of the current portion of $277,052, as of June 30, 2013. The term of this loan is five years with a fixed interest rate of 4.25% per annum. Management believes that given the fact that this term loan was entered into in the current period being reporting herein, that its carrying value approximates its fair value.
The carrying amount of the Company's long-term and respective short-term portion of Equipment notes was $196,539 and $50,516, at June 30, 2013, respectively. Management believes that given the fact that these Equipment notes were entered into in January 2013, that their carrying value approximates their fair value.
At December 31, 2012, the Company had two Equipment notes with balances outstanding in the amounts of $991,213 and $267,043, respectively, that were paid off in April 2013 and rolled into the commercial term loan noted above.
Concentration of credit risk
Financial instruments which potentially expose the Company to concentrations of credit risk, as defined by Accounting Standards Codification (“ASC”) 310 “Receivables”, consist primarily of trade accounts receivable and cash.
Accounts receivable are customer obligations due under normal trade terms. A large portion of the Company's products are sold to large diversified medical and defense product manufacturers. The Company does not generally require collateral for its sales; however, the Company believes that its terms of sale provide adequate protection against significant credit risk. Currently, the Company generally does not receive purchase volume commitments extending beyond several months. Large corporations can shift focus away from a need for the Company’s products and services with little or no warning. The loss of any one or more of these customers may have an immediate significant adverse effect on our financial results.
It is the Company’s policy to place its cash in high quality financial institutions. The Company does not believe significant credit risk exists above federally insured limits with respect to these institutions.
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and on deposit in high quality financial institutions with maturities of three months or less at the time of purchase.
Restricted cash
Restricted cash consists of cash on deposit at the Bank of Nova Scotia in lieu of a letter of credit associated with a performance guarantee liability (Note 9).
Allowance for doubtful accounts
Management regularly reviews accounts receivable to determine if any receivables will potentially be uncollectible.  The Company includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve, in the Company's overall allowance for doubtful accounts.  After all attempts to collect a receivable have failed, the receivable is written off against the allowance.  Based on the information available to the Company, management believes the allowance for doubtful accounts of $40,000 and $117,098 as of June 30, 2013 and December 31, 2012, respectively, are adequate.
Inventories
The Company values its inventory at the lower of average cost (FIFO) or net realizable value. The Company reviews its inventory for quantities in excess of production requirements, obsolescence and for compliance with internal quality specifications. Any adjustments to inventory would be equal to the difference between the cost of inventory and the estimated net market value based upon assumptions about future demand, market conditions and expected cost to distribute those products to market. The Company records adjustments to account for potential scrap during normal manufacturing operations or potential obsolescence for slow moving inventory.
Prepaid tooling
Costs related to the pre-production design and development for certain Tooling activities are classified as other current and other non-current assets as applicable. Prepaid Tooling costs include such costs associated with the production of tools sold to customers, for which the Company is recording corresponding deferred revenue. As deferred revenue is amortized into revenue, the associated prepaid tooling costs are expensed to cost of sales.
Property, plant and equipment
Property, plant and equipment are recorded at cost and include expenditures which substantially extend their useful lives. Depreciation on property, plant and equipment is calculated using the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and repairs are charged to earnings as incurred. When equipment is retired or sold, the resulting gain or loss is reflected in earnings.
Long-lived and intangible assets
In accordance with ASC 360, "Long-Lived Assets," the Company assesses the impairment of long-lived assets and intangible assets with finite lives whenever events or changes in circumstances indicate that the carrying value may not be fully recoverable. The net loss reported in the second quarter resulted in a twelve quarter cumulative loss, which the Company determined was a triggering event. As a result of this triggering event the Company reviewed the carrying value and lives of the long-lived assets using an undiscounted cash flow model and determined that no impairment existed as of June 30, 2013.
Intangible assets consist of the following:
 
June 30, 2013
 
December 31, 2012
 
(unaudited)
 
(audited)
 
Weighted average remaining life (years)
Gross
Accumulated Amortization**
Net
 
Gross
Accumulated Amortization
Net
Patents and Trademarks
13
$
478,255

$
(451,829
)
$
26,426

 
$
480,750

$
(456,361
)
$
24,389

Patents and Trademarks*
—
142,087

—

142,087

 
110,702

—

110,702

Trade names
9
33,250

(13,416
)
19,834

 
33,250

(12,250
)
21,000

     Total Intangible assets:
 
$
653,592

$
(465,245
)
$
188,347

 
$
624,702

$
(468,611
)
$
156,091

* Patents and Trademarks not yet in service.
** Reflects adjustment of $4,392 to correct year to date accumulated amortization
Income taxes
The Company accounts for income taxes in accordance with ASC 740 “Income Taxes,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using tax rates in effect for the year in which the differences are expected to reverse.
As of June 30, 2013, the Company has recorded twelve consecutive quarters of pre-tax losses. Additionally, management’s projections of future income in the face of challenging market conditions, and the impact of identified tax planning strategies, creates uncertainty regarding the Company's ability to realize its deferred tax assets pursuant to the “more-likely-than-not” standard , as defined in ASC 740-10-30-5. Accordingly, the Company has discretely recorded tax expense to establish a full valuation allowance on its beginning of the year deferred tax assets.
Management evaluated and weighted all available evidence, both positive and negative, through June 30, 2013, and determined that the weight of negative evidence occurring in the second quarter makes it difficult to form a supportable conclusion that a valuation allowance is not needed. Factors such as projected increases in cost of sales, overall sales volumes from key customers and the continued volatility in the silver market negatively impacted the second quarter re-forecast of pre-tax earnings and the analysis of future taxable income. Consequently, management has determined that the Company can no longer support the realization of its deferred tax assets, at a more-likely-than-not standard, and has identified the second quarter of 2013 as the appropriate period to record a full valuation allowance, on its beginning of the year deferred tax assets of $2,267,969.
For the year ended December 31, 2012, a valuation allowance of $470,900 was maintained against certain state and foreign deferred tax assets for which the realization of tax benefit was not more likely than not. Management determined that no change was necessary in the valuation allowance for the three or six months ended June 30, 2013.
Share-based compensation
The Company accounts for share-based compensation under the provisions of ASC 718 “Stock Compensation,” which establishes accounting for equity instruments exchanged for employee services.  Under ASC 718, share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant).
Comprehensive income
The Company follows the provisions of ASC 220 “Comprehensive Income,” which establishes standards for reporting and display of comprehensive income, its components, and accumulated balances.  Comprehensive income is defined to include all changes in equity, except those resulting from investments by owners and distributions to owners.  There were no changes in comprehensive income in the three or six months ended June 30, 2013. The Company has accumulated comprehensive income of $42,502 from changes in currency valuations with our discontinued Canadian operations as of June 30, 2013 and December 31, 2012.
Preferred stock
The Company has 2,000,000 shares of $1 par value preferred stock authorized.  No shares have been issued.
(Loss) earnings per share data
The Company follows the provisions of ASC 260 “Earnings Per Share,” which requires the Company to present its basic earnings per share and diluted earnings per share, and certain other earnings per share disclosures for each period presented.  Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding.  The computation of diluted earnings per share is similar to the computation of basic earnings per share except that the denominator is increased to include the average number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued.  In addition, the numerator is adjusted for any changes in income that would result from the assumed conversions of those potential shares. As of June 30, 2013 and December 31, 2012 there were 268,000 and 285,000 options outstanding, respectively, that were anti-dilutive and were not included in the calculation of earnings or loss per share.
Basic and diluted EPS computations are as follows:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
(unaudited)
 
(unaudited)
 
 
2013
 
2012 Revised
 
2013
 
2012 Revised
Net loss available to common shareholders
$
(2,890,191
)
$
(1,045,083
)
$
(2,895,861
)
$
(1,481,003
)
Weighted average common shares outstanding
 
2,704,239

 
2,790,514

 
2,704,239

 
2,790,514

(Loss) income per share - basic
 
 
 
 
 
 
 
 
Continuing operations
 
(1.06
)
 
(0.10
)
 
(1.06
)
 
0.02

Discontinued operations
 
—

 
(0.27
)
 
(0.01
)
 
(0.55
)
Loss per share - basic
$
(1.06
)
$
(0.37
)
$
(1.07
)
$
(0.53
)
 
 
 
 
 
 
 

 
 
Net loss available to common shareholders
$
(2,890,191
)
$
(1,045,083
)
$
(2,895,861
)
$
(1,481,003
)
Weighted average common shares outstanding, basic
 
2,704,239

 
2,790,514

 
2,704,239

 
2,790,514

Assumed conversion of net common shares issuable under stock option plans
 
—

 
—

 
—

 
—

Weighted average common and common equivalent shares outstanding, diluted
 
2,704,239

 
2,790,514

 
2,704,239

 
2,790,514

(Loss) income per share - diluted
 
 
 
 
 
 
 
 
Continuing operations
 
(1.06
)
 
(0.10
)
 
(1.06
)
 
0.02

Discontinued operations
 
—

 
(0.27
)
 
(0.01
)
 
(0.55
)
Loss per share - diluted
$
(1.06
)
$
(0.37
)
$
(1.07
)
$
(0.53
)

Segments
The Company follows the provisions of ASC 280 “Segment Reporting,” which requires reporting of selected information about operating segments in interim and annual financial statements issued to the public.  It also establishes standards for disclosures regarding products and services, geographic areas, and major customers.  ASC 280 defines operating segments as components of an enterprise that engage in business activities that may earn revenues and incur expenses, which have separate financial information available, and are evaluated regularly by the Chief Operating Decision Maker ("CODM") in deciding how to allocate resources and in assessing performance.
In 2012, the Company determined that the Company's results will be reported as one segment due to the discontinued operations of its WirelessDx segment and since the results of its previously reported ART segment were not quantitatively material and were not regularly reviewed by the CODM.
Research and development
Research and development expenses include costs directly attributable to the conduct of research and development programs primarily related to the development of our software products and improving the efficiency and capabilities of our manufacturing processes.  Such costs include salaries, payroll taxes, employee benefit costs, materials, supplies, depreciation on research equipment, and services provided by outside contractors.  All costs associated with research and development programs are expensed as incurred.
Recent accounting pronouncements
In January 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-01 "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities". The main objective of this update is to address implementation issues about the scope of ASU 2011-11 "Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities", as well as to clarify the scope of the offsetting disclosures and address any unintended consequences of ASU 2011-11. This update helps clarify the scope of disclosures as they apply to derivatives accounted for in accordance with Topic 815 "Derivatives and Hedging". An entity is required to apply the amendments for fiscal years beginning on or after January 1, 2013 and provide the required disclosures retrospectively for all comparative periods presented. At present the Company does not have any derivatives as outlined in Topic 815, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, or securities borrowings or securities lending transactions. As such, the Company does not expect this update to have a material impact on the Company's results of operations or financial position.
Reclassifications
     Certain reclassifications have been made to prior period amounts to conform to the current period presentation, primarily related to discontinued operations and deferred revenue. In the third quarter of 2012, the Company discontinued the operations of the Company's WirelessDx subsidiaries and has therefore reclassified the June 30, 2012 results of the WirelessDx subsidiaries as discontinued operations. In 2012, the Company revised prior period balances to correct errors in the revenue recognition of certain Tooling transactions (Note 11).
v2.4.0.8
Note 3. Inventories
 6 Months Ended
Jun. 30, 2013
Inventories [Abstract]  
Inventories
Inventories
Inventories consist of the following:
 
June 30,
2013
 
December 31, 2012
Raw materials
$
1,384,641

 
$
521,908

Work-in-process 
206,667

 
248,159

Finished goods
859,901

 
1,645,037

Total
$
2,451,209

 
$
2,415,104


The value of silver in inventory at June 30, 2013 and December 31, 2012 as a part of finished goods as plated sensors, work in process, or raw materials was $430,933 and $541,804, respectively. Inventories are stated at their net realizable value, net of a reserve for slow moving and obsolete inventory of $365,000 and $317,484 at June 30, 2013 and December 31, 2012, respectively.
v2.4.0.8
Note 4. Plant, Property & Equipment, net (Notes)
 6 Months Ended
Jun. 30, 2013
Plant, Property & Equipment, net [Abstract]  
Property, Plant & Equipment, net
Property, Plant and Equipment, net
Property, plant and equipment consist of the following:
 
Asset lives (in years)
June 30, 2013
 
December 31, 2012
Machinery and equipment
 
3
to
15
 
$
13,188,699

 
12,298,011

Building and improvements
 
 
20
 
 
4,293,725

 
4,293,725

Vehicles
 
3
to
5
 
94,227

 
94,227

Furniture, fixtures, computers and software
 
3
to
5
 
1,250,471

 
1,246,807

Land
 
 
 
 
 
202,492

 
202,492

Construction in progress
 
 
 
 
 
154,626

 
103,269

Total property, plant and equipment
 
 
 
 
 
19,184,240

 
18,238,531

Less: accumulated depreciation
 
 
 
 
 
(11,769,205
)
 
(11,080,019
)
Property, plant and equipment, net
 
 
 
 
 
$
7,415,035

 
$
7,158,512


For the six months ended June 30, 2013 and 2012, the Company recorded $697,895 and $699,858 of depreciation expense, respectively.
v2.4.0.8
Note 5. Debt
 6 Months Ended
Jun. 30, 2013
Debt [Abstract]  
Debt
Debt
As of June 30, 2013 and December 31, 2012, the Company had the following outstanding debt:
 
June 30, 2013
December 31, 2012
Line of credit
$
2,174,493

$
800,000

 
 
 
Debt:
 
 
Commercial term loan
$
1,454,957

$
—

Less current portion
(277,052
)
—

Total long-term debt
$
1,177,905

$
—

 
 
 
Equipment notes
$
247,055

$
1,258,256

Less current portion
(50,516
)
(267,043
)
Total long-term equipment notes
$
196,539

$
991,213


At June 30, 2013, the Company has a $4.0 million revolver under its new banking facility, as described more fully below. This new facility provides for borrowings up to 80% of eligible accounts receivable and 50% of eligible raw materials inventory.  The interest rate at June 30, 2013 was 3.50% and the outstanding principal balance was $2,174,493. This revolver has a maturity date of June 30, 2015. At June 30, 2013, the Company had approximately $522,000 ($300,000 estimated at September 30, 2013) of available borrowing capacity on this revolver.
At December 31, 2012, the Company had a $3.0 million demand line of credit with a bank that provided for borrowings up to 80% of eligible accounts receivable, and 50% of eligible finished goods inventories up to a $700,000 maximum at a rate of 2% over LIBOR. The interest rate was 2.21% and the outstanding principal balance was $800,000 at December 31, 2012. This demand line of credit was paid off and closed in April 2013 by the new bank facility as described more fully below.
During the six months ended June 30, 2013, the Company entered into two equipment notes totaling $272,500 with a financing company to acquire production equipment. The outstanding balance of these equipment notes at June 30, 2013 was $247,055. The term of these equipment notes is five years.
On March 29, 2013, the Company entered into a multi-year credit facility with a Massachusetts based bank. The new credit facility includes revolver of up to $4.0 million, a commercial term loan of $1.5 million and an equipment line of credit of $1.0 million and is secured by substantially all assets of the Company with the exception of real property.
The $4.0 million revolver, which provides for borrowings up to 80% of net eligible receivables and 50% of net eligible raw materials inventory, replaced the previous $3.0 million demand line of credit which was scheduled to expire April 30, 2013. The revolver has a maturity date of June 30, 2015. At June 30, 2013 the Company had $2,174,493 outstanding on the revolver with an interest rate of 3.5%. At June 30, 2013, the Company had $521,882 of available borrowing capacity on this revolver.
The $1.5 million term loan was used to refinance existing Equipment notes, and to fund other current liabilities of continuing operations. The term loan has a five year term with a maturity date of March 29, 2018.
The equipment line of credit of $1.0 million is for the purchase of capital equipment. Advances on the equipment line shall not exceed 80% of the invoice amount of the equipment being purchased. The term of the equipment line of credit is six years, maturing on March 29, 2019, inclusive of a one year maximum draw period. At June 30, 2013, the Company had not drawn any funds upon this equipment line of credit.
In April, 2013, the Company used proceeds from its $1.5 million commercial term loan to refinance certain operating leases and Equipment notes and used additional proceeds from the revolver to refinance its $800,000 demand line of credit with the Company's former bank. The new debt agreement requires the Company to submit its quarterly financial statements accompanied by an accountant's review report within 45 days of each respective quarter end. 
The borrowing agreements, under the new bank facility as described above, contain covenants that relate to various matters including notice prior to executing further borrowings and security interests, mergers or consolidations, acquisitions, guarantees, sales of assets other than in the normal course of business, leasing, changes in ownership and payment of dividends.
At December 31, 2012, the Company had a master lease agreement with its bank that allowed for money to be drawn on standard terms for the purchase of equipment. During the twelve months ended December 31, 2012, two Equipment notes were entered into under this master lease agreement. In the first quarter of 2012, Micron entered into an Equipment note for $523,269. This Equipment note was structured in such a way that the Company received a cash payout for amounts already paid to vendors of $262,960, with the remaining $260,309 paid by the bank directly to the equipment vendors making total principal amount of the Equipment note entered into $523,269. The cash payout is part of the proceeds from Equipment note on the statement of cash flows. The remaining amount of $260,309 was a non-cash event and is disclosed in the supplemental cash flow schedule (Note 10). At December 31, 2012, the outstanding balance of this Equipment note was $450,758. In the second quarter of 2012, WirelessDx, under this master lease agreement, entered an Equipment note for $888,650. This Equipment note was structured in such a way that the Company received a cash payout for amounts already paid to vendors of $672,272. The remaining $216,378 was paid by the bank directly to the equipment vendors making total principal amount of the Equipment note entered into $888,650. The cash payout is part of the proceeds from equipment note on the statement of cash flows. The remaining amount of $216,378 was a non-cash event and is disclosed in the supplemental cash flow schedule (Note 10). This WirelessDx Equipment note was guaranteed by ART, therefore, all amounts associated with this note are reflected as part of continuing operations on the balance sheet and statement of cash flows. At December 31, 2012, the outstanding balance of this Equipment note was $807,498. The Equipment notes under this master lease agreement were paid off in April, 2013 using the commercial term loan under the new bank facility. The outstanding balances of the Equipment notes under this master lease agreement at June 30, 2013 and December 31, 2012 were $0 and $1,258,256, respectively.
v2.4.0.8
Note 6. Income Taxes
 6 Months Ended
Jun. 30, 2013
Income Taxes [Abstract]  
Income Taxes
Income Taxes
The following table sets forth certain information regarding income tax benefits:
 
Three months ended June 30,
 
Six months ended June 30,
 
2013
2012 Revised
 
2013
2012 Revised
Income tax provision (benefit) from continuing operations
$
2,352,478

$
(217,150
)
 
$
2,267,969

$
(313,490
)
The tax provisions for the six months ended June 30, 2013 and 2012 are attributable to the U.S. Federal, state and foreign income taxes on our continuing operations. The tax provision for the six months ended June 30, 2013 includes the discrete impact on tax expense of $2,267,969 associated with the establishment of a full valuation allowance of the Company’s beginning of the year deferred tax assets.
The Company has recorded twelve consecutive quarters of pre-tax losses. Additionally, Management’s projections of future income in the face of challenging market conditions, and the diminished impact of identified tax planning strategies, provides significant negative evidence to overcome to support the realization of the Company’s deferred tax assets.
Management evaluated and weighted all available evidence through June 30, 2013, both positive and negative, and determined that the weight of negative evidence occurring in the second quarter makes it difficult to form a supportable conclusion that a valuation allowance is not needed. Factors such as projected increases in cost of sales, overall sales volumes from key customers and the continued volatility in the silver market negatively impact the second quarter re-forecast of pre-tax earnings and the analysis of future taxable income. Consequently, management has determined that the Company can no longer support the realization of its deferred tax assets, at a more-likely-than-not threshold, and has identified the second quarter of 2013 as the appropriate period to record a full valuation allowance on its beginning of the year deferred tax assets of $2,267,969.
The Company now maintains a full valuation allowance against its U.S. Federal, state, and foreign deferred tax assets associated with its continuing and discontinued operations. For the year ended December 31, 2012, a valuation allowance of $470,900 was maintained against certain state and foreign deferred tax assets for which the realization of tax benefit was not more likely than not.
The Company files income tax returns in the U.S. Federal and various state and foreign jurisdictions and the periods from 2009 to 2012 remain open to examination by the taxing authorities in the various jurisdictions. The Company believes it is not subject to any significant tax risks related to uncertain tax positions. Accordingly, the Company has not accrued interest or penalties associated with unrecognized tax benefits.
The Company recorded an income tax provision of $5,031 for the three months ended June 30, 2013, which is the result of the reversal of the remaining deferred tax assets on the balance sheet of discontinued operations. The Company had an income tax benefit for the three months ended June 30, 2012 of $334,000 for discontinued operations. The provision and benefit are reflected in the net loss from discontinued operations, net of tax, in the Company's consolidated statements of operations.
For the six months ended June 30, 2013, the Company has recorded no income tax provision or benefit for discontinued operations for 2013. The Company had an income tax benefit for the six months ended June 30, 2012 of $541,000 for discontinued operations which is reflected in the net loss from discontinued operations, net of tax, in the Company's consolidated statements of operations.
v2.4.0.8
Note 7. Commitments and Contingencies (Notes)
 6 Months Ended
Jun. 30, 2013
Commitments and Contingencies [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
Legal Matters
The Company is from time to time subject to legal proceedings, threats of legal action and claims which arise in the ordinary course of our business.   With respect to three specific matters, aggregate claims have been asserted of approximately $700,000.  Management believes the maximum reasonably possible loss related to these matters is substantially less than the amounts asserted.  Management, with its external legal counsel, intends to vigorously defend these matters and management believes that it has meritorious defenses in all such matters.  Accordingly, no accrual has been recorded for these matters as of June 30, 2013.  Management believes that the ultimate resolution of these matters, including likely recoveries from insurance carriers if unfavorable outcomes occur, will not have a material adverse effect on our results of operations or financial condition.
Operating Leases
The Company leases vehicles and equipment under non-cancelable lease arrangements ranging from three to five years.  Lease expense under all operating leases was approximately $0 and $51,898 for the three months ended June 30, 2013 and 2012, respectively and $51,898 and $103,795 for the six months ended June 30, 2013 and 2012, respectively.
v2.4.0.8
Note 8. Share-Based Compensation
 6 Months Ended
Jun. 30, 2013
Share-based Compensation [Abstract]  
Share-Based Compensation
Share-Based Compensation
     The Company recognized share-based compensation expense of $13,500 and $26,982 for the three months ended June 30, 2013 and 2012, respectively and $27,746 and $64,502 for the six months ended June 30, 2013 and 2012, respectively. 
The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model.  Key assumptions used to estimate the fair value of the stock options include the exercise price of the award, the expected option term, the expected volatility of the Company’s stock over the option’s expected term, the risk free interest rate over the option’s expected term, and the Company’s expected annual dividend yield.  The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the Company’s stock options for the three and six months ended June 30, 2013 and 2012.  Estimates of fair values are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards.
The option life was determined using the historical data to determine an expected option life. Prior to 2013 the simplified method was used. During the three and six months ended June 30, 2013, a total of 15,000 new grants were issued versus no new grants being issued during the three and six months ended June 30, 2012.
Share-based incentive plan
At June 30, 2013, the Company had one stock option plan that provides for both incentive and non-qualified stock options to be granted to certain eligible employees, non-employee directors, or consultants.  On March 10, 2010, the Company's Board of Directors adopted the Arrhythmia Research Technology, Inc. 2010 Equity Incentive Plan (the “2010 Plan”) upon the recommendation of the Compensation Committee. The 2010 Plan authorizes the issuance of an aggregate of 500,000 shares, namely, 400,000 shares of our common stock plus an aggregate of 100,000 shares previously reserved for issuance under the Company's 2005 Stock Award Plan (the “2005 Plan”). The 2010 Plan replaced in its entirety the 2005 Plan, under which no grants have been made. The Company's 2001 Stock Option Plan (the "2001 Plan"), which expired in 2011, will continue to govern outstanding options but no further options will be granted under the 2001 Plan. The options granted have either six or ten year contractual terms and either vest immediately or vest annually over a five-year term.
At June 30, 2013, there were 371,000 shares available for future grants under the 2010 Plan.
The following table sets forth the stock option transactions for the six months ended June 30, 2013:
 
Number of shares
Weighted average exercise price
Weighted average remaining contractual term (years)
Aggregate intrinsic value
Outstanding at December 31, 2012
285,000
$
2.44

4.8
$
—

Exercisable at December 31, 2012
138,900

2.53

3.1
—

  Granted
15,000

2.58

9.75
—

  Exercised
—

—

—
—

  Forfeited/expired
(32,000
)
11.42

—
—

Outstanding at June 30, 2013
268,000

6.18

4.66
1,050

Exercisable at June 30, 2013
164,000

$
6.33

3.19
$
—


During the six months ended June 30, 2013, 15,000 new options were granted as compared to zero new options for the same period in 2012.  At June 30, 2013 and 2012, the intrinsic value of the exercisable options is $1,050 and $0, respectively.
The following table sets forth the status of the Company’s non-vested options for the six months ended June 30, 2013:
 
 
Number of shares
Weighted average fair value
Non-vested at December 31, 2012
146,100

$
1.22

Granted
15,000

0.82

Vested
(46,300
)
1.51

Forfeited/expired
(10,800
)
1.47

Non-vested at June 30, 2013
104,000

$
1.01


The following table presents the average price and contractual life information of options outstanding and exercisable at June 30, 2013: 
Exercise Price
Number of Outstanding Shares
Weighted Average Remaining Contractual Life (years)
Options Currently
Exercisable
Average Fair Value
at Grant Date
$2.58
15,000
9.75
—
$0.82
$3.41
65,000
2.51
42,000
0.96
$5.73
62,000
7.93
26,000
1.42
$7.15
74,000
0.51
74,000
2.74
$9.86
52,000
7.89
22,000
0.65
 
268,000
 
164,000
 
 
At June 30, 2013, there was $91,850 of total unrecognized cost related to non-vested share-based compensation arrangements granted under the Plan.  This cost is expected to be recognized over a weighted average period of 3.07 years.
v2.4.0.8
Note 9. Discontinued Operations
 6 Months Ended
Jun. 30, 2013
Discontinued Operations [Abstract]  
Discontinued Operations
Discontinued Operations
In the third quarter of 2012 the Company discontinued the operations of its WirelessDx subsidiaries. The financial statements presented herein are adjusted for discontinued operations. Management sold the remaining assets in the third quarter of 2013. The assets had a net book value of $0 at June 30, 2013.
Net revenues from discontinued operations for the three months ended June 30, 2013 and 2012 were $0 and $151,776, respectively. Loss from discontinued operations for the three months ended June 30, 2013 and 2012, were 12,808 and 757,287, respectively, presented net of a tax provision of $5,031 and a tax benefit of $334,000, respectively.
Net revenues from discontinued operations for the six months ended June 30, 2013 and 2012 were $0 and $240,818, respectively. Loss from discontinued operations for the six months ended June 30, 2013 and 2012 were 20,546 and 1,527,325, respectively, presented net of tax benefits of $0 and $541,000, respectively.
At June 30, 2013 and December 31, 2012, the Company has a $1.0 million liability, for an unmet performance obligation related to an economic incentive package, related to the discontinued operations. This performance obligation was secured by a $1.0 million letter of credit at December 31, 2012. In April 2013, as part of a new bank facility, this letter of credit was replaced with $1.0 million in restricted cash. At both June 30, 2013 and December 31, 2012, the performance guarantee liability was carried on the balance sheet of continuing operations, as the liability is guaranteed by ART. The outcome of this liability will be determined on or before June 30, 2014.
The assets and liabilities of the discontinued operations are presented in the unaudited June 30, 2013 and audited December 31, 2012 condensed consolidated balance sheet excluding intercompany loans which exceed net book value listed below:
 
June 30, 2013

 
December 31, 2012
Cash
$
2,495

 
$
30,882

Prepaid expenses and other assets
—

 
3,419

     Total current assets from discontinued operations
2,495

 
34,301

 
 
 
 
Property and equipment, net of impairment and accumulated depreciation of $119,050 and $1,434,937, respectively
—

 
284,300

Deferred taxes, non-current
—

 
—

     Total non-current assets from discontinued operations
—

 
284,300

     Total assets from discontinued operations
$
2,495

 
$
318,601

Accounts payable
$
322,262

 
$
477,324

Accrued expenses
—

 
123,247

    Total current liabilities from discontinued operations
322,262

 
600,571

    Total liabilities from discontinued operations
$
322,262

 
$
600,571
v2.4.0.8
Note 10. Supplemental Cash Flow Disclosure (Notes)
 6 Months Ended
Jun. 30, 2013
Supplemental Cash Flow [Abstract]  
Supplemental Cash Flow
Supplemental Cash Flow Disclosures
 
Six months ended June 30,
 
2013
2012 Revised
Cash paid for interest
$
40,593

$
6,886

Acquisition of fixed assets with Equipment notes
$
272,500

$
476,687

 
 
 
v2.4.0.8
Note 11. Reclassification of prior periods (Notes)
 6 Months Ended
Jun. 30, 2013
Reclassification of prior periods [Abstract]  
Reclassification of prior periods
Revisions and Reclassification of Prior Period Balances
Certain revisions and reclassifications have been made to prior period amounts to conform to the current year presentation, primarily related to discontinued operations and deferred revenue. In the third quarter of 2012 the Company discontinued the operations of the Company's WirelessDx subsidiaries and has therefore reclassified the June 30, 2012 results of the WirelessDx subsidiaries as discontinued operations. In 2012 the Company revised prior period balances to correct errors in the revenue recognition of certain Tooling transactions.
Revision of prior period financial statements
During the year end audit of the Company's 2012 balance sheet and statement of operations, the Company identified prior period errors relating to the accounting for certain Tooling transactions. The Company had been incorrectly recognizing revenue for certain Tooling transactions by not deferring the related revenue in accordance with guidance set forth in ASC 605-25, “Revenue Recognition: Multiple-Element Arrangements.” As a result of the error in revenue recognition of multiple element arrangements, reported revenue and costs of sales as well as total assets and total liabilities have been misstated.
In evaluating whether the Company's previously issued consolidated financial statements were materially misstated, the Company considered the guidance in ASC 250, "Accounting for Changes and Error Corrections," ASC 250-10-S99-1, "Assessing Materiality" and ASC 250-10-S99-2, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements." The Company concluded that these errors were not material individually or in the aggregate to any of the prior reporting periods, and therefore, amendments of previously filed reports were not required, as more fully described in the Company's Annual Report on Form 10-K for the year ended December 31, 2012. As such, the revisions for these corrections to the applicable prior periods are reflected in the financial information included herein and have been provided in summarized format below.
    
The impact of the errors on the Company's balance sheet as of June 30, 2012 is summarized below:
June 30, 2012
 
As originally reported
Adjusted for discontinued operations
Correction of error adjustment
As revised
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
  Deferred income taxes
 
$
64,100

$
—

$
72,860

$
136,960

  Deposits, prepaid expenses and other current assets
 
1,348,816

(97,254
)
244,167

1,495,729

    Total current assets
 
8,334,194

(461,624
)
317,027

8,189,597

  Other non-current assets
 
—

—

281,489

281,489

    Total assets
 
19,364,280

2,494,759

598,516

22,457,555

 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
 
Current liabilities:
 
 
 
 
 
  Deferred revenue
 
—

—

312,041

312,041

    Total current liabilities
 
3,809,909

(578,098
)
312,041

3,543,852

Long-term liabilities:
 
 
 
 
 
  Long-term deferred revenue
 
—

—

398,304

398,304

    Total long-term liabilities
 
1,137,187

(272,722
)
398,304

1,262,769

    Total liabilities
 
4,947,096

(850,820
)
710,345

4,806,621

Shareholders’ equity:
 
 
 
 
 
  Retained earnings
 
6,608,419

3,938,692

(111,829
)
10,435,282

    Total shareholders’ equity
 
14,417,184

3,345,579

(111,829
)
17,650,934

    Total liabilities and shareholders’ equity
 
19,364,280

2,494,759

598,516

22,457,555



The impact of the errors on the Company's statements of operations for the three and six months ended June 30, 2012 is summarized below:
 
Three months ended June 30, 2012
 
Six months ended June 30, 2012
 
As originally reported
Adjusted for discontinued operations
Correction of error adjustment
As revised
 
As originally reported
Adjusted for discontinued operations
Correction of error adjustment
As revised
Net revenues
$
4,976,985

$
(151,776
)
$
(30,708
)
$
4,794,501

 
$
11,282,167

$
(240,818
)
$
(415,226
)
$
10,626,123

Cost of sales
4,702,364

(514,614
)
(22,724
)
4,165,026

 
9,897,121

(903,266
)
(307,268
)
8,686,587

Gross profit
274,621

362,838

(7,984
)
629,475

 
1,385,046

662,448

(107,958
)
1,939,536

Loss from operations
(1,581,071
)
1,091,287

(7,984
)
(497,768
)
 
(2,212,732
)
2,068,325

(107,958
)
(252,362
)
Loss before taxes
(1,588,249
)
1,091,287

(7,984
)
(504,946
)
 
(2,227,535
)
2,068,325

(107,958
)
(267,168
)
Income tax benefit
(548,000
)
334,000

(3,150
)
(217,150
)
 
(811,900
)
541,000

(42,590
)
(313,490
)
(Loss) income before discontinued operations
(1,040,249
)
757,287

(4,834
)
(287,796
)
 
(1,415,635
)
1,527,325

(65,368
)
46,322

Net loss
(1,040,249
)
—

(4,834
)
(1,045,083
)
 
(1,415,635
)
—

(65,368
)
(1,481,003
)
Loss per share - basic and diluted
(0.37
)
—

—

(0.37
)
 
(0.51
)
—

(0.02
)
(0.53
)
Weighted average shares outstanding, basic and diluted
2,790,514

 
2,790,514

2,790,514

 
2,790,514

 
2,790,514

2,790,514


    
The impact of the errors on the Company's statements of cash flows for the six months ended June 30, 2012 is summarized below:
 
 
Six months ended June 30, 2012
 
 
As originally reported
Adjusted for discontinued operations
Correction of error adjustment
As revised
Net loss
 
$
(1,415,635
)
$
—

$
(65,368
)
$
(1,481,003
)
Deferred income taxes
 
(807,400
)
541,000

(42,590
)
(308,990
)
Changes in operating assets and liabilities:
 
 
 
 
 
     Deposits, prepaid expenses and other assets
 
(685,290
)
142,090

(113,757
)
(656,957
)
     Other non-current assets
 
—

—

(193,511
)
(193,511
)
Accounts payable
 
737,447

(349,838
)
 
387,609

     Accrued expenses and other current liabilities
 
(581,080
)
185,681

152,997

(242,402
)
     Other non-current liabilities
 
—

—

262,229

262,229

Net cash used in operating activities
 
(814,130
)
(518,933
)
—

(1,333,063
)
v2.4.0.8
Note 12. Subsequent Events (Notes)
 6 Months Ended
Jun. 30, 2013
Subsequent Events [Abstract]  
Subsequent Events [Text Block]
Subsequent Events
On September 12, 2013, Mr. David A. Garrison resigned as Executive Vice President and Chief Financial Officer of the Company and Micron Products, Inc. (“Micron Products”) effective immediately. The resignation was not a result of any disagreement with the Company’s Board or its management.
On September 12, 2013, Mr. Derek T. Welch, age 45, the Company's Corporate Controller, was appointed to act as principal financial officer and principal accounting officer of the Company and appointed to serve as Treasurer of Micron Products by the Board of Directors.
Effective September 19, 2013, Mr. Patrick L. Muldoon, a Class III director, resigned as a member of the Board of Directors and the committees of the Board on which he served. The resignation was not a result of any disagreement with the Company’s Board or its management.
v2.4.0.8
Note 2. Accounting Policies (Policies)
 6 Months Ended
Jun. 30, 2013
Accounting Policies [Abstract]  
Principles of Consolidation
Principles of Consolidation
The consolidated financial statements include the accounts of ART and its wholly owned subsidiary, Micron Products, Inc. ("Micron"). The Company's Pennsylvania subsidiary, RMDDxUSA Corp., and its Prince Edward Island subsidiary, RMDDx Corporation, collectively "WirelessDx", discontinued operations in the third quarter of 2012 and are presented herein as discontinued operations. All intercompany balances and transactions have been eliminated in consolidation.
Revenue Recognition
Revenue Recognition
Revenue is recorded when all criteria for revenue recognition have been satisfied, which is generally when goods are shipped to the Company's customers. Product revenue is recognized in the period when persuasive evidence of an arrangement with a customer exists, the products are shipped and title has transferred to the customer, the price is fixed or determined and collection is probable.
The Company defers revenue recognition on the sale of certain molds and tools, as well as certain engineering and validation services (collectively "Tooling"), until customer acceptance, including inspection and installation requirements, as defined, are achieved. The Company evaluates arrangements with potential multiple elements to determine if there is more than one unit of accounting.
The Company enters into arrangements containing multiple elements which may include a combination of the sale of molds, tooling, engineering and validation services and production units. The Company has determined that sale of certain molds, tooling, engineering and validation services, and the production units, represent one unit of accounting, based on an assessment of the respective standalone value, as defined in ASC 605-25, “Revenue Recognition: Multiple - Element Arrangements.”
The Company evaluates the merits and individual uniqueness of each transaction, the related product(s), and the customer, to determine if the arrangement qualifies for revenue recognition as multiple element arrangements. The Company determined that the estimated product life-cycle, and historical knowledge of the customer will determine the appropriate life over which the deferred revenue will be amortized into revenue, which generally takes place within two to five years of the initiation of the arrangement. Revenue for the production units is recognized upon shipment.
The Company cannot adequately predict short-term or long-term future production units in a consistent and meaningful manner given the prototyping and sampling nature of these molds and associated products. Many of these products require validation of a new design or acceptable end product and their viability in their respective competitive marketplaces. Therefore, the future production possibilities are unpredictable and sometimes volatile making the Company unable to account for the transactions under the Units of Production method. Therefore, management has determined that the most appropriate method of amortizing the amounts into revenue is the straight-line method. Furthermore, the Company will use these factors in determining when it may be appropriate to accelerate remaining deferred revenue into income for products sold to customers who may have excessive time lags between the making of the mold and the production of units from the mold.
In connection with the preparation of the consolidated financial statements for the year ended December 31, 2012, the Company reviewed the accounting treatment of revenue recognition for certain Tooling transactions and their relation to molding or machining of production units for sale to the customer. As a result of such review, management determined that the Company had been incorrectly recognizing revenue for certain Tooling transactions by not deferring the related revenue in accordance with guidance set forth in ASC 605-25, “Revenue Recognition: Multiple - Element Arrangements.”
The Company determined that the errors were not material individually or in the aggregate to the overall presentation of any of the prior reporting periods, and therefore, amendments of previously filed reports were not required. However, the Company revised prior years as more fully described in the Company's Annual Report on Form 10-K for the year ended December 31, 2012. As such, the statement of operations, statement of cash flows and the applicable notes to the consolidated financial statements for the three and six months ended June 30, 2012, included in this Form 10-Q, have been revised to reflect the correction of these errors as more fully described in Note 11.
The Company also recognizes revenue in accordance with ASC 985-605 "Software - Revenue Recognition" for software licenses it sells. Revenue is recognized when licenses are sold as the revenue cycle is completed with no warranty, returns or technical support to customers. Total revenue from software sales was immaterial in relation to consolidated revenues.
Fair value of financial instruments
Fair value of financial instruments
The carrying amount reported in the balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the immediate or short-term nature of such instruments.
The Company had lines of credit with outstanding balances of $2,174,493 and $800,000 at June 30, 2013 and December 31, 2012, respectively, which approximates the fair value of these instruments due to the variable interest rates.
The carrying amount of the Company's long-term debt in the form of a commercial term loan was $1,177,905, net of the current portion of $277,052, as of June 30, 2013. The term of this loan is five years with a fixed interest rate of 4.25% per annum. Management believes that given the fact that this term loan was entered into in the current period being reporting herein, that its carrying value approximates its fair value.
The carrying amount of the Company's long-term and respective short-term portion of Equipment notes was $196,539 and $50,516, at June 30, 2013, respectively. Management believes that given the fact that these Equipment notes were entered into in January 2013, that their carrying value approximates their fair value.
At December 31, 2012, the Company had two Equipment notes with balances outstanding in the amounts of $991,213 and $267,043, respectively, that were paid off in April 2013 and rolled into the commercial term loan noted above.
Concentration of risk
Concentration of credit risk
Financial instruments which potentially expose the Company to concentrations of credit risk, as defined by Accounting Standards Codification (“ASC”) 310 “Receivables”, consist primarily of trade accounts receivable and cash.
Accounts receivable are customer obligations due under normal trade terms. A large portion of the Company's products are sold to large diversified medical and defense product manufacturers. The Company does not generally require collateral for its sales; however, the Company believes that its terms of sale provide adequate protection against significant credit risk. Currently, the Company generally does not receive purchase volume commitments extending beyond several months. Large corporations can shift focus away from a need for the Company’s products and services with little or no warning. The loss of any one or more of these customers may have an immediate significant adverse effect on our financial results.
It is the Company’s policy to place its cash in high quality financial institutions. The Company does not believe significant credit risk exists above federally insured limits with respect to these institutions.
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and on deposit in high quality financial institutions with maturities of three months or less at the time of purchase.
Restricted cash
Restricted cash
Restricted cash consists of cash on deposit at the Bank of Nova Scotia in lieu of a letter of credit associated with a performance guarantee liability (Note 9).
Allowance for doubtful accounts
Allowance for doubtful accounts
Management regularly reviews accounts receivable to determine if any receivables will potentially be uncollectible.  The Company includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve, in the Company's overall allowance for doubtful accounts.  After all attempts to collect a receivable have failed, the receivable is written off against the allowance.  Based on the information available to the Company, management believes the allowance for doubtful accounts of $40,000 and $117,098 as of June 30, 2013 and December 31, 2012, respectively, are adequate.
Inventories
Inventories
The Company values its inventory at the lower of average cost (FIFO) or net realizable value. The Company reviews its inventory for quantities in excess of production requirements, obsolescence and for compliance with internal quality specifications. Any adjustments to inventory would be equal to the difference between the cost of inventory and the estimated net market value based upon assumptions about future demand, market conditions and expected cost to distribute those products to market. The Company records adjustments to account for potential scrap during normal manufacturing operations or potential obsolescence for slow moving inventory.
Prepaid tooling
Prepaid tooling
Costs related to the pre-production design and development for certain Tooling activities are classified as other current and other non-current assets as applicable. Prepaid Tooling costs include such costs associated with the production of tools sold to customers, for which the Company is recording corresponding deferred revenue. As deferred revenue is amortized into revenue, the associated prepaid tooling costs are expensed to cost of sales.
Property, plant and equipment
Property, plant and equipment
Property, plant and equipment are recorded at cost and include expenditures which substantially extend their useful lives. Depreciation on property, plant and equipment is calculated using the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and repairs are charged to earnings as incurred. When equipment is retired or sold, the resulting gain or loss is reflected in earnings.
Long-lived and Intangible assets
Long-lived and intangible assets
In accordance with ASC 360, "Long-Lived Assets," the Company assesses the impairment of long-lived assets and intangible assets with finite lives whenever events or changes in circumstances indicate that the carrying value may not be fully recoverable. The net loss reported in the second quarter resulted in a twelve quarter cumulative loss, which the Company determined was a triggering event. As a result of this triggering event the Company reviewed the carrying value and lives of the long-lived assets using an undiscounted cash flow model and determined that no impairment existed as of June 30, 2013.
Intangible assets consist of the following:
 
June 30, 2013
 
December 31, 2012
 
(unaudited)
 
(audited)
 
Weighted average remaining life (years)
Gross
Accumulated Amortization**
Net
 
Gross
Accumulated Amortization
Net
Patents and Trademarks
13
$
478,255

$
(451,829
)
$
26,426

 
$
480,750

$
(456,361
)
$
24,389

Patents and Trademarks*
—
142,087

—

142,087

 
110,702

—

110,702

Trade names
9
33,250

(13,416
)
19,834

 
33,250

(12,250
)
21,000

     Total Intangible assets:
 
$
653,592

$
(465,245
)
$
188,347

 
$
624,702

$
(468,611
)
$
156,091

* Patents and Trademarks not yet in service.
** Reflects adjustment of $4,392 to correct year to date accumulated amortization
Income taxes
Income taxes
Share-based compensation
Share-based compensation
The Company accounts for share-based compensation under the provisions of ASC 718 “Stock Compensation,” which establishes accounting for equity instruments exchanged for employee services.  Under ASC 718, share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant).
Comprehensive income
Comprehensive income
The Company follows the provisions of ASC 220 “Comprehensive Income,” which establishes standards for reporting and display of comprehensive income, its components, and accumulated balances.  Comprehensive income is defined to include all changes in equity, except those resulting from investments by owners and distributions to owners.  There were no changes in comprehensive income in the three or six months ended June 30, 2013. The Company has accumulated comprehensive income of $42,502 from changes in currency valuations with our discontinued Canadian operations as of June 30, 2013 and December 31, 2012.
Preferred stock
Preferred stock
The Company has 2,000,000 shares of $1 par value preferred stock authorized.  No shares have been issued.
(Loss) earnings per share data
(Loss) earnings per share data
The Company follows the provisions of ASC 260 “Earnings Per Share,” which requires the Company to present its basic earnings per share and diluted earnings per share, and certain other earnings per share disclosures for each period presented.  Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding.  The computation of diluted earnings per share is similar to the computation of basic earnings per share except that the denominator is increased to include the average number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued.  In addition, the numerator is adjusted for any changes in income that would result from the assumed conversions of those potential shares. As of June 30, 2013 and December 31, 2012 there were 268,000 and 285,000 options outstanding, respectively, that were anti-dilutive and were not included in the calculation of earnings or loss per share.
Basic and diluted EPS computations are as follows:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
(unaudited)
 
(unaudited)
 
 
2013
 
2012 Revised
 
2013
 
2012 Revised
Net loss available to common shareholders
$
(2,890,191
)
$
(1,045,083
)
$
(2,895,861
)
$
(1,481,003
)
Weighted average common shares outstanding
 
2,704,239

 
2,790,514

 
2,704,239

 
2,790,514

(Loss) income per share - basic
 
 
 
 
 
 
 
 
Continuing operations
 
(1.06
)
 
(0.10
)
 
(1.06
)
 
0.02

Discontinued operations
 
—

 
(0.27
)
 
(0.01
)
 
(0.55
)
Loss per share - basic
$
(1.06
)
$
(0.37
)
$
(1.07
)
$
(0.53
)
 
 
 
 
 
 
 

 
 
Net loss available to common shareholders
$
(2,890,191
)
$
(1,045,083
)
$
(2,895,861
)
$
(1,481,003
)
Weighted average common shares outstanding, basic
 
2,704,239

 
2,790,514

 
2,704,239

 
2,790,514

Assumed conversion of net common shares issuable under stock option plans
 
—

 
—

 
—

 
—

Weighted average common and common equivalent shares outstanding, diluted
 
2,704,239

 
2,790,514

 
2,704,239

 
2,790,514

(Loss) income per share - diluted
 
 
 
 
 
 
 
 
Continuing operations
 
(1.06
)
 
(0.10
)
 
(1.06
)
 
0.02

Discontinued operations
 
—

 
(0.27
)
 
(0.01
)
 
(0.55
)
Loss per share - diluted
$
(1.06
)
$
(0.37
)
$
(1.07
)
$
(0.53
)
Segments
Segments
The Company follows the provisions of ASC 280 “Segment Reporting,” which requires reporting of selected information about operating segments in interim and annual financial statements issued to the public.  It also establishes standards for disclosures regarding products and services, geographic areas, and major customers.  ASC 280 defines operating segments as components of an enterprise that engage in business activities that may earn revenues and incur expenses, which have separate financial information available, and are evaluated regularly by the Chief Operating Decision Maker ("CODM") in deciding how to allocate resources and in assessing performance.
In 2012, the Company determined that the Company's results will be reported as one segment due to the discontinued operations of its WirelessDx segment and since the results of its previously reported ART segment were not quantitatively material and were not regularly reviewed by the CODM.
Research and development
Research and development
Research and development expenses include costs directly attributable to the conduct of research and development programs primarily related to the development of our software products and improving the efficiency and capabilities of our manufacturing processes.  Such costs include salaries, payroll taxes, employee benefit costs, materials, supplies, depreciation on research equipment, and services provided by outside contractors.  All costs associated with research and development programs are expensed as incurred.
Recent accounting pronouncements
Recent accounting pronouncements
In January 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-01 "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities". The main objective of this update is to address implementation issues about the scope of ASU 2011-11 "Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities", as well as to clarify the scope of the offsetting disclosures and address any unintended consequences of ASU 2011-11. This update helps clarify the scope of disclosures as they apply to derivatives accounted for in accordance with Topic 815 "Derivatives and Hedging". An entity is required to apply the amendments for fiscal years beginning on or after January 1, 2013 and provide the required disclosures retrospectively for all comparative periods presented. At present the Company does not have any derivatives as outlined in Topic 815, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, or securities borrowings or securities lending transactions. As such, the Company does not expect this update to have a material impact on the Company's results of operations or financial position.
Reclassification
Reclassifications
     Certain reclassifications have been made to prior period amounts to conform to the current period presentation, primarily related to discontinued operations and deferred revenue. In the third quarter of 2012, the Company discontinued the operations of the Company's WirelessDx subsidiaries and has therefore reclassified the June 30, 2012 results of the WirelessDx subsidiaries as discontinued operations. In 2012, the Company revised prior period balances to correct errors in the revenue recognition of certain Tooling transactions (Note 11).
v2.4.0.8
Note 2. Accounting Policies (Tables)
 6 Months Ended
Jun. 30, 2013
Intangible Assets [Abstract]  
Intangible Assets
Intangible assets consist of the following:
 
June 30, 2013
 
December 31, 2012
 
(unaudited)
 
(audited)
 
Weighted average remaining life (years)
Gross
Accumulated Amortization**
Net
 
Gross
Accumulated Amortization
Net
Patents and Trademarks
13
$
478,255

$
(451,829
)
$
26,426

 
$
480,750

$
(456,361
)
$
24,389

Patents and Trademarks*
—
142,087

—

142,087

 
110,702

—

110,702

Trade names
9
33,250

(13,416
)
19,834

 
33,250

(12,250
)
21,000

     Total Intangible assets:
 
$
653,592

$
(465,245
)
$
188,347

 
$
624,702

$
(468,611
)
$
156,091

* Patents and Trademarks not yet in service.
** Reflects adjustment of $4,392 to correct year to date accumulated amortization
Basic and diluted EPS
Basic and diluted EPS computations are as follows:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
(unaudited)
 
(unaudited)
 
 
2013
 
2012 Revised
 
2013
 
2012 Revised
Net loss available to common shareholders
$
(2,890,191
)
$
(1,045,083
)
$
(2,895,861
)
$
(1,481,003
)
Weighted average common shares outstanding
 
2,704,239

 
2,790,514

 
2,704,239

 
2,790,514

(Loss) income per share - basic
 
 
 
 
 
 
 
 
Continuing operations
 
(1.06
)
 
(0.10
)
 
(1.06
)
 
0.02

Discontinued operations
 
—

 
(0.27
)
 
(0.01
)
 
(0.55
)
Loss per share - basic
$
(1.06
)
$
(0.37
)
$
(1.07
)
$
(0.53
)
 
 
 
 
 
 
 

 
 
Net loss available to common shareholders
$
(2,890,191
)
$
(1,045,083
)
$
(2,895,861
)
$
(1,481,003
)
Weighted average common shares outstanding, basic
 
2,704,239

 
2,790,514

 
2,704,239

 
2,790,514

Assumed conversion of net common shares issuable under stock option plans
 
—

 
—

 
—

 
—

Weighted average common and common equivalent shares outstanding, diluted
 
2,704,239

 
2,790,514

 
2,704,239

 
2,790,514

(Loss) income per share - diluted
 
 
 
 
 
 
 
 
Continuing operations
 
(1.06
)
 
(0.10
)
 
(1.06
)
 
0.02

Discontinued operations
 
—

 
(0.27
)
 
(0.01
)
 
(0.55
)
Loss per share - diluted
$
(1.06
)
$
(0.37
)
$
(1.07
)
$
(0.53
)
v2.4.0.8
Note 3. Inventories (Tables)
 6 Months Ended
Jun. 30, 2013
Inventories [Abstract]  
Inventories
Inventories consist of the following:
 
June 30,
2013
 
December 31, 2012
Raw materials
$
1,384,641

 
$
521,908

Work-in-process 
206,667

 
248,159

Finished goods
859,901

 
1,645,037

Total
$
2,451,209

 
$
2,415,104
v2.4.0.8
Note 4. Plant, Property & Equipment, net (Tables)
 6 Months Ended
Jun. 30, 2013
Property, Plant and Equipment [Abstract]  
Property, Plant & Equipment, net
Property, plant and equipment consist of the following:
 
Asset lives (in years)
June 30, 2013
 
December 31, 2012
Machinery and equipment
 
3
to
15
 
$
13,188,699

 
12,298,011

Building and improvements
 
 
20
 
 
4,293,725

 
4,293,725

Vehicles
 
3
to
5
 
94,227

 
94,227

Furniture, fixtures, computers and software
 
3
to
5
 
1,250,471

 
1,246,807

Land
 
 
 
 
 
202,492

 
202,492

Construction in progress
 
 
 
 
 
154,626

 
103,269

Total property, plant and equipment
 
 
 
 
 
19,184,240

 
18,238,531

Less: accumulated depreciation
 
 
 
 
 
(11,769,205
)
 
(11,080,019
)
Property, plant and equipment, net
 
 
 
 
 
$
7,415,035

 
$
7,158,512
v2.4.0.8
Note 5. Debt (Tables)
 6 Months Ended
Jun. 30, 2013
Outstanding Debt [Abstract]  
Outstanding Debt
As of June 30, 2013 and December 31, 2012, the Company had the following outstanding debt:
 
June 30, 2013
December 31, 2012
Line of credit
$
2,174,493

$
800,000

 
 
 
Debt:
 
 
Commercial term loan
$
1,454,957

$
—

Less current portion
(277,052
)
—

Total long-term debt
$
1,177,905

$
—

 
 
 
Equipment notes
$
247,055

$
1,258,256

Less current portion
(50,516
)
(267,043
)
Total long-term equipment notes
$
196,539

$
991,213
v2.4.0.8
Note 6. Income Taxes (Tables)
 6 Months Ended
Jun. 30, 2013
Income Taxes [Abstract]  
Income Taxes
The following table sets forth certain information regarding income tax benefits:
 
Three months ended June 30,
 
Six months ended June 30,
 
2013
2012 Revised
 
2013
2012 Revised
Income tax provision (benefit) from continuing operations
$
2,352,478

$
(217,150
)
 
$
2,267,969

$
(313,490
)
v2.4.0.8
Note 8. Share-Based Compensation (Tables)
 6 Months Ended
Jun. 30, 2013
Share-based Compensation [Abstract]  
Stock Option Transactions
The following table sets forth the stock option transactions for the six months ended June 30, 2013:
 
Number of shares
Weighted average exercise price
Weighted average remaining contractual term (years)
Aggregate intrinsic value
Outstanding at December 31, 2012
285,000
$
2.44

4.8
$
—

Exercisable at December 31, 2012
138,900

2.53

3.1
—

  Granted
15,000

2.58

9.75
—

  Exercised
—

—

—
—

  Forfeited/expired
(32,000
)
11.42

—
—

Outstanding at June 30, 2013
268,000

6.18

4.66
1,050

Exercisable at June 30, 2013
164,000

$
6.33

3.19
$
—
Non Vested Stock Options
The following table sets forth the status of the Company’s non-vested options for the six months ended June 30, 2013:
 
 
Number of shares
Weighted average fair value
Non-vested at December 31, 2012
146,100

$
1.22

Granted
15,000

0.82

Vested
(46,300
)
1.51

Forfeited/expired
(10,800
)
1.47

Non-vested at June 30, 2013
104,000

$
1.01
Average Price and Contractual Life for Options
The following table presents the average price and contractual life information of options outstanding and exercisable at June 30, 2013: 
Exercise Price
Number of Outstanding Shares
Weighted Average Remaining Contractual Life (years)
Options Currently
Exercisable
Average Fair Value
at Grant Date
$2.58
15,000
9.75
—
$0.82
$3.41
65,000
2.51
42,000
0.96
$5.73
62,000
7.93
26,000
1.42
$7.15
74,000
0.51
74,000
2.74
$9.86
52,000
7.89
22,000
0.65
 
268,000
 
164,000
 
v2.4.0.8
Note 9. Discontinued Operations (Tables)
 6 Months Ended
Jun. 30, 2013
Discontinued Operations [Abstract]  
Discontinued Operations
The assets and liabilities of the discontinued operations are presented in the unaudited June 30, 2013 and audited December 31, 2012 condensed consolidated balance sheet excluding intercompany loans which exceed net book value listed below:
 
June 30, 2013

 
December 31, 2012
Cash
$
2,495

 
$
30,882

Prepaid expenses and other assets
—

 
3,419

     Total current assets from discontinued operations
2,495

 
34,301

 
 
 
 
Property and equipment, net of impairment and accumulated depreciation of $119,050 and $1,434,937, respectively
—

 
284,300

Deferred taxes, non-current
—

 
—

     Total non-current assets from discontinued operations
—

 
284,300

     Total assets from discontinued operations
$
2,495

 
$
318,601

Accounts payable
$
322,262

 
$
477,324

Accrued expenses
—

 
123,247

    Total current liabilities from discontinued operations
322,262

 
600,571

    Total liabilities from discontinued operations
$
322,262

 
$
600,571
v2.4.0.8
Note 10. Supplemental Cash Flow Disclosure (Tables)
 6 Months Ended
Jun. 30, 2013
Supplemental Cash Flows [Abstract]  
Supplemental Cash Flows
 
Six months ended June 30,
 
2013
2012 Revised
Cash paid for interest
$
40,593

$
6,886

Acquisition of fixed assets with Equipment notes
$
272,500

$
476,687

 
 
 
v2.4.0.8
Note 11. Reclassification of prior periods (Tables)
 6 Months Ended
Jun. 30, 2013
Reclassification of prior periods [Abstract]  
Reclassification of prior periods, balance sheet
The impact of the errors on the Company's balance sheet as of June 30, 2012 is summarized below:
June 30, 2012
 
As originally reported
Adjusted for discontinued operations
Correction of error adjustment
As revised
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
  Deferred income taxes
 
$
64,100

$
—

$
72,860

$
136,960

  Deposits, prepaid expenses and other current assets
 
1,348,816

(97,254
)
244,167

1,495,729

    Total current assets
 
8,334,194

(461,624
)
317,027

8,189,597

  Other non-current assets
 
—

—

281,489

281,489

    Total assets
 
19,364,280

2,494,759

598,516

22,457,555

 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
 
Current liabilities:
 
 
 
 
 
  Deferred revenue
 
—

—

312,041

312,041

    Total current liabilities
 
3,809,909

(578,098
)
312,041

3,543,852

Long-term liabilities:
 
 
 
 
 
  Long-term deferred revenue
 
—

—

398,304

398,304

    Total long-term liabilities
 
1,137,187

(272,722
)
398,304

1,262,769

    Total liabilities
 
4,947,096

(850,820
)
710,345

4,806,621

Shareholders’ equity:
 
 
 
 
 
  Retained earnings
 
6,608,419

3,938,692

(111,829
)
10,435,282

    Total shareholders’ equity
 
14,417,184

3,345,579

(111,829
)
17,650,934

    Total liabilities and shareholders’ equity
 
19,364,280

2,494,759

598,516

22,457,555
Reclassification of prior periods, statement of operations
The impact of the errors on the Company's statements of operations for the three and six months ended June 30, 2012 is summarized below:
 
Three months ended June 30, 2012
 
Six months ended June 30, 2012
 
As originally reported
Adjusted for discontinued operations
Correction of error adjustment
As revised
 
As originally reported
Adjusted for discontinued operations
Correction of error adjustment
As revised
Net revenues
$
4,976,985

$
(151,776
)
$
(30,708
)
$
4,794,501

 
$
11,282,167

$
(240,818
)
$
(415,226
)
$
10,626,123

Cost of sales
4,702,364

(514,614
)
(22,724
)
4,165,026

 
9,897,121

(903,266
)
(307,268
)
8,686,587

Gross profit
274,621

362,838

(7,984
)
629,475

 
1,385,046

662,448

(107,958
)
1,939,536

Loss from operations
(1,581,071
)
1,091,287

(7,984
)
(497,768
)
 
(2,212,732
)
2,068,325

(107,958
)
(252,362
)
Loss before taxes
(1,588,249
)
1,091,287

(7,984
)
(504,946
)
 
(2,227,535
)
2,068,325

(107,958
)
(267,168
)
Income tax benefit
(548,000
)
334,000

(3,150
)
(217,150
)
 
(811,900
)
541,000

(42,590
)
(313,490
)
(Loss) income before discontinued operations
(1,040,249
)
757,287

(4,834
)
(287,796
)
 
(1,415,635
)
1,527,325

(65,368
)
46,322

Net loss
(1,040,249
)
—

(4,834
)
(1,045,083
)
 
(1,415,635
)
—

(65,368
)
(1,481,003
)
Loss per share - basic and diluted
(0.37
)
—

—

(0.37
)
 
(0.51
)
—

(0.02
)
(0.53
)
Weighted average shares outstanding, basic and diluted
2,790,514

 
2,790,514

2,790,514

 
2,790,514

 
2,790,514

2,790,514
Reclassification of prior periods, statement of cash fows
The impact of the errors on the Company's statements of cash flows for the six months ended June 30, 2012 is summarized below:
 
 
Six months ended June 30, 2012
 
 
As originally reported
Adjusted for discontinued operations
Correction of error adjustment
As revised
Net loss
 
$
(1,415,635
)
$
—

$
(65,368
)
$
(1,481,003
)
Deferred income taxes
 
(807,400
)
541,000

(42,590
)
(308,990
)
Changes in operating assets and liabilities:
 
 
 
 
 
     Deposits, prepaid expenses and other assets
 
(685,290
)
142,090

(113,757
)
(656,957
)
     Other non-current assets
 
—

—

(193,511
)
(193,511
)
Accounts payable
 
737,447

(349,838
)
 
387,609

     Accrued expenses and other current liabilities
 
(581,080
)
185,681

152,997

(242,402
)
     Other non-current liabilities
 
—

—

262,229

262,229

Net cash used in operating activities
 
(814,130
)
(518,933
)
—

(1,333,063
)
v2.4.0.8
Note 1. Basis of Presentation (Details) (USD $)
Jun. 30, 2013
Mar. 29, 2013
Dec. 31, 2012
Borrowings under line of credit, revolver $ 2,174,493   $ 800,000
Borrowings under commercial term loan 1,454,957   0
Equipment notes under master lease agreement 247,055   1,258,256
Revolving line of credit   4,000,000  
Commercial term loan   1,500,000  
Equipment line of credit   $ 1,000,000  
v2.4.0.8
Note 2. Accounting Policies Intangible Assets (Details) (USD $)
 6 Months Ended
Jun. 30, 2013
Dec. 31, 2012
Patents and Trademarks [Member]
    
Weighted average remaining life (years) 13  
Gross $ 478,255 $ 480,750
Accumulated amortization (451,829) (456,361)
Net 26,426 24,389
Patents and Trademarks not yet in service [Member]
    
Weighted average remaining life (years) 0  
Gross 142,087 110,702
Accumulated amortization 0 0
Net 142,087 110,702
Trade Names [Member]
    
Weighted average remaining life (years) 9  
Gross 33,250 33,250
Accumulated amortization (13,416) (12,250)
Net 19,834 21,000
Total Intangible Assets [Member]
    
Gross 653,592 624,702
Accumulated amortization (465,245) (468,611)
Net $ 188,347 $ 156,091
v2.4.0.8
Note 2. Accounting Policies Basic and Diluited EPS (Details) (USD $)
 3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Basic and Diluted EPS [Line Items]        
Net loss available to common shareholders $ (2,890,191) $ (1,045,083) $ (2,895,861) $ (1,481,003)
Weighted average common shares outstanding 2,704,239 2,790,514 2,704,239 2,790,514
Continuing operations $ (1.06) $ (0.10) $ (1.06) $ 0.02
Discontinued operations $ 0.00 $ (0.27) $ (0.01) $ (0.55)
Loss per share - basic $ (1.06) $ (0.37) $ (1.07) $ (0.53)
Net loss available to common shareholders (2,890,191) (1,045,083) (2,895,861) (1,481,003)
Weighted average common shares outstanding, basic 2,704,239 2,790,514 2,704,239 2,790,514
Assumed conversion of net common shares issuable under stock option plans 0   0 0
Weighted average common and common equivalent shares outstanding, diluted $ 2,704,239 $ 2,790,514 $ 2,704,239 $ 2,790,514
Continuing operations $ (1.06) $ (0.10) $ (1.06) $ 0.02
Discontinued operations $ 0.00 $ (0.27) $ (0.01) $ (0.55)
Loss per share - diluted $ (1.06) $ (0.37) $ (1.07) $ (0.53)
v2.4.0.8
Note 2. Accounting Policies In text values (Details) (USD $)
 3 Months Ended
Jun. 30, 2013
Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Borrowings under line of credit, revolver $ 2,174,493 $ 800,000
Long-term debt, net of current portion 1,177,905 0
Current portion of long-term debt 277,052 0
Current portion of equipment notes 50,516 267,043
Long-term portion of equipment notes 196,539 991,213
Allowance for doubtful accounts 40,000 117,098
Deferred tax asset, valuation allowance 2,267,969  
Valuation allowance, discontinued operations   470,900
Accumulated comprehensive income, from foreign currency translation $ 42,502 $ 42,502
Preferred stock, shares authorized 2,000,000 2,000,000
Preferred stock, par value $ 1 $ 1
Number of shares outsanding 268,000 285,000
v2.4.0.8
Note 3. Inventories (Details) (USD $)
Jun. 30, 2013
Dec. 31, 2012
Inventories [Line Items]    
Raw materials $ 1,384,641 $ 521,908
Work-in-process 206,667 248,159
Finished goods 859,901 1,645,037
Total 2,451,209 2,415,104
Silver intentory 430,933 541,804
Reserve for slow moving and obsolete inventory $ (365,000) $ (317,484)
v2.4.0.8
Note 4. Plant, Property & Equipment, net (Details) (USD $)
 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Dec. 31, 2012
Property, Plant and Equipment [Line Items]      
Machinery and equipment $ 13,188,699   $ 12,298,011
Buildings and improvements 4,293,725   4,293,725
Vehicles 94,227   94,227
Furniture, fixtures, computers and software 1,250,471   1,246,807
Land 202,492   202,492
Construction in progress 154,626   103,269
Total property, plant and equipment 19,184,240   18,238,531
Less: accumulated depreciation (11,769,205)   (11,080,019)
Property, plant and equipment, net 7,415,035   7,158,512
Depreciation expense $ (697,895) $ (699,858)  
Minimum [Member]
      
Property, Plant and Equipment [Line Items]      
Machinery and equipment, asset life, years 3    
Vehicles, asset life, years 3    
Furniture, fixtures, computers and software, asset life, years 3    
Maximum [Member]
      
Property, Plant and Equipment [Line Items]      
Machinery and equipment, asset life, years 15    
Vehicles, asset life, years 5    
Furniture, fixtures, computers and software, asset life, years 5    
Service Life [Member]
      
Property, Plant and Equipment [Line Items]      
Building and improvement, asset life, years 20    
v2.4.0.8
Note 5. Debt (Details) (USD $)
Jun. 30, 2013
Dec. 31, 2012
Debt [Line Items]    
Line of credit $ 2,174,493 $ 800,000
Commercial term loan 1,454,957 0
Less current portion (277,052) 0
Total long-term debt 1,177,905 0
Equipment notes 247,055 1,258,256
Less current portion (50,516) (267,043)
Total long-term equipment notes $ 196,539 $ 991,213
v2.4.0.8
Note 5. Debt Outstanding debt, details (Details) (USD $)
 3 Months Ended 6 Months Ended
Jun. 30, 2012
Mar. 31, 2012
Jun. 30, 2013
Mar. 29, 2013
Dec. 31, 2012
Outstanding debt, details [Abstract]          
Equipment notes, new     $ 272,500    
Equipment notes under master lease agreement     247,055   1,258,256
Borrowings under line of credit, revolver     2,174,493   800,000
Available remainging borrowing capacity under revolver     521,882    
Revolving line of credit       4,000,000  
Commercial term loan       1,500,000  
Equipment line of credit       1,000,000  
Borrowings under commercial term loan     1,454,957   0
Previous demand line of credit         3,000,000
Master lease agreement, equipment note, Micron   523,269      
Cash payout received as part of master lease agreement   262,960      
Payment to vendors as part of master lease agreement   260,309      
Ending balance, equipment note         450,758
Master lease agreement, equipment note, WirelessDx 888,650        
Cash payout received as part of master lease agreement, WirelessDx 672,272        
Amount paid to equipment vendors, master lease agreement, WirelessDx 216,378        
Outstanding balance, master lease agreement, WIrelessDx         807,498
Outstanding balance of equipment notes     $ 0   $ 1,258,256
v2.4.0.8
Note 6. Income Taxes (Details) (USD $)
 3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Dec. 31, 2012
Income Taxes          
Income tax benefit from continuing operations $ 2,352,478 $ (217,150) $ 2,267,969 $ (313,490)  
Deferred tax asset, valuation allowance 2,267,969        
Valuation Allowance, Amount         470,900
Income tax provision, discontinued operations 5,031        
Income tax benefit, discontinued operations   $ 334,000 $ 0 $ 541,000  
v2.4.0.8
Note 7. Commitments and Contingencies (Details) (USD $)
 3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Commitments and Contingencies [Line Items]        
Legal matters, approximate costs     $ 700,000  
Lease Expense $ 0 $ 51,898 $ 51,898 $ 103,795
v2.4.0.8
Note 8. Share-Based Compensation Stock Option Transactions (Details) (USD $)
Jun. 30, 2012
Jun. 30, 2013
Outstanding - December 31, 2012
Jun. 30, 2013
Exercisable - December 31, 2012
Jun. 30, 2013
Granted during period
Jun. 30, 2013
Exercised during period
Jun. 30, 2013
Forfeited/expired during period
Jun. 30, 2013
Outstanding - June 30, 2013
Jun. 30, 2013
Exercisable - June 30, 2013
Share-based Compensation [Line Items]                
Number of Shares   285,000 138,900 15,000 0 (32,000) 268,000 164,000
Weighted average exercise price   $ 2.44 $ 2.53 $ 2.58 $ 0 $ 11.42 $ 6.18 $ 6.33
Remaining contractual term (years)   4.8 3.1 9.75 0.00 0.00 4.66 3.19
Aggregate intrinsic value $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 1,050 $ 0
v2.4.0.8
Note 8. Share-Based Compensation Non- Vested Options (Details) (USD $)
 6 Months Ended
Jun. 30, 2013
Dec. 31, 2012
Stock Options [Member]
    
Share-based Compensation [Line Items]    
Non-vested shares, December 31, 2012   146,100
Non-vested options, Granted During Period, Shares 15,000  
Non-vested options, Vested During Period, number (46,300)  
Non-vested Options, Forfeited/Expired during period, number (10,800)  
Non-vested shares, June 30, 2013 104,000  
Weighted Average [Member]
    
Share-based Compensation [Line Items]    
Non-vested shares, fair value - December 31, 2012   $ 1.22
Non-vested options, Granted During Period, Fair Value $ 0.82  
Non-vested options, Vested During Period, Fair Value $ 1.51  
Non-vested options, Forfeited/Expired during period, Fair Value $ 1.47  
Non-vested shares, fair value - June 30, 2013 $ 1.01  
v2.4.0.8
Note 8. Share-Based Compensation Average Price and Contractual Life By Expiration Date (Details) (USD $)
Jun. 30, 2013
Dec. 31, 2012
Number of outstanding shares 268,000 285,000
Unrecognized cost related to non-vested share-based compensation arrangements granted under the Plan $ 91,850  
Period to recognize cost related to non-vested share-based compensation arrangements 3.07  
Exercise Price $2.58 [Member]
    
Exercise price $ 2.58  
Number of outstanding shares 15,000  
weighted average remaining contractual life ( years) 9.75  
Number of shares exercisable 0  
Average fair value at grant date $ 0.82  
Exercise Price $3.41 [Member]
    
Exercise price $ 3.41  
Number of outstanding shares 65,000  
weighted average remaining contractual life ( years) 2.51  
Number of shares exercisable 42,000  
Average fair value at grant date $ 0.96  
Exercise Price $5.73 [Member]
    
Exercise price $ 5.73  
Number of outstanding shares 62,000  
weighted average remaining contractual life ( years) 7.93  
Number of shares exercisable 26,000  
Average fair value at grant date $ 1.42  
Exercise Price $7.15 [Member]
    
Exercise price $ 7.15  
Number of outstanding shares 74,000  
weighted average remaining contractual life ( years) 0.51  
Number of shares exercisable 74,000  
Average fair value at grant date $ 2.74  
Exercise Price $9.86 [Member]
    
Exercise price $ 9.86  
Number of outstanding shares 52,000  
weighted average remaining contractual life ( years) 7.89  
Number of shares exercisable 22,000  
Average fair value at grant date $ 0.65  
Total Options [Member]
    
Number of outstanding shares 268,000  
Number of shares exercisable 164,000  
v2.4.0.8
Note 8. Share-Based Compensation Share-Based Compensation Expense (Details) (USD $)
 3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Dec. 31, 2010
Share-based Compensation Expense [Line Items]          
Share-based Compensation Expense $ 13,500 $ 26,982 $ 27,746 $ 64,502  
Share-based insentive plan [Abstract]          
Aggregate shares authorized for issuance         500,000
Common stock included in the '2010 Plan'         400,000
Shares reserved for the '2005 Plan'         100,000
Shares available for future grants, 2010 Plan 371,000   371,000    
v2.4.0.8
Note 9. Discontinued Operations Discontinued operations, assets and liabilities(Details) (USD $)
Jun. 30, 2013
Dec. 31, 2012
Condensed Consolidated Balance Sheet    
Cash $ 2,495 $ 30,882
Prepaid expenses and other assets 0 3,419
Total current assets from discontinued operations 2,495 34,301
Property and equipment, net of impairment and accumulated depreciation of $119,050 and $1,434,937, respectively 0 284,300
Deferred taxes, non-current 0 0
Total non-current assets from discontinued operations 0 284,300
Total assets from discontinued operations 2,495 318,601
Accounts payable 322,262 477,324
Accrued expenses 0 123,247
Total current liabilities from discontinued operations 322,262 600,571
Total liabilities from discontinued operations $ 322,262 $ 600,571
v2.4.0.8
Note 9. Discontinued Operations Discontinued operations, details (Details) (USD $)
 3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Discontinued operations, details [Abstract]        
Net revenues from discontinued operations $ 0 $ 151,776 $ 0 $ 240,818
Loss from discontinued operations     20,546 1,527,325
Income (Loss) from Discontinued Operations, Net of Tax, Attributable to Parent (12,808) (757,287) (20,546) (1,527,325)
Income tax provision 5,031      
Income tax benefit, discontinued operations   334,000 0 541,000
Unmet performance obligation $ 1,000,000   $ 1,000,000  
v2.4.0.8
Note 10. Supplemental Cash Flow Disclosure (Details) (USD $)
 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Supplemental Cash Fows [Line Items]    
Cash paid for interest $ 40,593 $ 6,886
Acquisition of fixed assets with equipment notes $ 272,500 $ 476,687
v2.4.0.8
Note 11. Reclassification of prior periods Balance Sheet, period reclassification (Details) (USD $)
Jun. 30, 2012
As Originally Reported [Member]
  
Current Assets:  
Deferred income taxes $ 64,100
Deposits, prepaid expenses and other current assets 1,348,816
Total current assets 8,334,194
Other non-current assets 0
Total assets 19,364,280
Current liabilities:  
Deferred revenue 0
Total current liabilities 3,809,909
Long-term liabilities:  
Long-term deferred revenue 0
Total long-term liabilities 1,137,187
Total liabilities 4,947,096
Shareholders' equity:  
Retained earning 6,608,419
Total shareholders' equity 14,417,184
Total liabilities and shareholders' equity 19,364,280
Adjustment for Discontinued Operations [Member]
  
Current Assets:  
Deferred income taxes 0
Deposits, prepaid expenses and other current assets (97,254)
Total current assets (461,624)
Other non-current assets 0
Total assets 2,494,759
Current liabilities:  
Deferred revenue 0
Total current liabilities (578,098)
Long-term liabilities:  
Long-term deferred revenue 0
Total long-term liabilities (272,722)
Total liabilities (850,820)
Shareholders' equity:  
Retained earning 3,938,692
Total shareholders' equity 3,345,579
Total liabilities and shareholders' equity 2,494,759
Correction of error adjustment [Member]
  
Current Assets:  
Deferred income taxes 72,860
Deposits, prepaid expenses and other current assets 244,167
Total current assets 317,027
Other non-current assets 281,489
Total assets 598,516
Current liabilities:  
Deferred revenue 312,041
Total current liabilities 312,041
Long-term liabilities:  
Long-term deferred revenue 398,304
Total long-term liabilities 398,304
Total liabilities 710,345
Shareholders' equity:  
Retained earning (111,829)
Total shareholders' equity (111,829)
Total liabilities and shareholders' equity 598,516
As Revised [Member]
  
Current Assets:  
Deferred income taxes 136,960
Deposits, prepaid expenses and other current assets 1,495,729
Total current assets 8,189,597
Other non-current assets 281,489
Total assets 22,457,555
Current liabilities:  
Deferred revenue 312,041
Total current liabilities 3,543,852
Long-term liabilities:  
Long-term deferred revenue 398,304
Total long-term liabilities 1,262,769
Total liabilities 4,806,621
Shareholders' equity:  
Retained earning 10,435,282
Total shareholders' equity 17,650,934
Total liabilities and shareholders' equity $ 22,457,555
v2.4.0.8
Note 11. Reclassification of prior periods Statement of Operations, period reclassification (Details) (USD $)
 3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2012
As Originally Reported [Member]
    
Reclassification of Prior Periods, Statment of Operations [Line Items]    
Net revenues $ 4,976,985 $ 11,282,167
Cost of sales 4,702,364 9,897,121
Gross profit 274,621 1,385,046
Loss from operations (1,581,071) (2,212,732)
Loss before taxes (1,588,249) (2,227,535)
Income tax benefit (548,000) (811,900)
(Loss income before discontinued operations (1,040,249) (1,415,635)
Net loss (1,040,249) (1,415,635)
Loss per share - basic and diluted $ (0.37) $ (0.51)
Weighted average shares outstanding, basic and diluted 2,790,514 2,790,514
Adjustment for Discontinued Operations [Member]
    
Reclassification of Prior Periods, Statment of Operations [Line Items]    
Net revenues (151,776) (240,818)
Cost of sales (514,614) (903,266)
Gross profit 362,838 662,448
Loss from operations 1,091,287 2,068,325
Loss before taxes 1,091,287 2,068,325
Income tax benefit 334,000 541,000
(Loss income before discontinued operations 757,287 1,527,325
Net loss 0 0
Loss per share - basic and diluted $ 0 $ 0.00
Correction of error adjustment [Member]
    
Reclassification of Prior Periods, Statment of Operations [Line Items]    
Net revenues (30,708) (415,226)
Cost of sales (22,724) (307,268)
Gross profit (7,984) (107,958)
Loss from operations (7,984) (107,958)
Loss before taxes (7,984) (107,958)
Income tax benefit (3,150) (42,590)
(Loss income before discontinued operations (4,834) (65,368)
Net loss (4,834) (65,368)
Loss per share - basic and diluted $ 0.00 $ (0.02)
Weighted average shares outstanding, basic and diluted 2,790,514 2,790,514
As Revised [Member]
    
Reclassification of Prior Periods, Statment of Operations [Line Items]    
Net revenues 4,794,501 10,626,123
Cost of sales 4,165,026 8,686,587
Gross profit 629,475 1,939,536
Loss from operations (497,768) (252,362)
Loss before taxes (504,946) (267,168)
Income tax benefit (217,150) (313,490)
(Loss income before discontinued operations (287,796) 46,322
Net loss $ (1,045,083) $ (1,481,003)
Loss per share - basic and diluted $ (0.37) $ (0.53)
Weighted average shares outstanding, basic and diluted 2,790,514 2,790,514
v2.4.0.8
Note 11. Reclassification of prior periods Statement of Cash Flows, period reclassification (Details) (USD $)
 6 Months Ended
Jun. 30, 2012
As Originally Reported [Member]
  
Statement of cash flows, period reclassification [Line Items]  
Net loss $ (1,415,635)
Deferred income taxes (807,400)
Deposits, prepaid expenses and other assets (685,290)
Other non-current assets 0
Accounts payable 737,447
Accrued expenses and other current liabilities (581,080)
Other non-current liabilities 0
Net cash used in operating activities (814,130)
Adjustment for Discontinued Operations [Member]
  
Statement of cash flows, period reclassification [Line Items]  
Net loss 0
Deferred income taxes 541,000
Deposits, prepaid expenses and other assets 142,090
Other non-current assets 0
Accounts payable (349,838)
Accrued expenses and other current liabilities 185,681
Other non-current liabilities 0
Net cash used in operating activities (518,933)
Correction of error adjustment [Member]
  
Statement of cash flows, period reclassification [Line Items]  
Net loss (65,368)
Deferred income taxes (42,590)
Deposits, prepaid expenses and other assets (113,757)
Other non-current assets (193,511)
Accrued expenses and other current liabilities 152,997
Other non-current liabilities 262,229
Net cash used in operating activities 0
As Revised [Member]
  
Statement of cash flows, period reclassification [Line Items]  
Net loss (1,481,003)
Deferred income taxes (308,990)
Deposits, prepaid expenses and other assets (656,957)
Other non-current assets (193,511)
Accounts payable 387,609
Accrued expenses and other current liabilities (242,402)
Other non-current liabilities 262,229
Net cash used in operating activities $ (1,333,063)