SEC XBRL Viewer

Document and Entity Information Document	6 Months Ended
Document and Entity Information Document	Jun. 30, 2014	Aug. 08, 2014
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, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		2,731,839

Consolidated Balance Sheets (USD $)	Jun. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 232,024	$ 749,766
Restricted cash	0	1,000,000
Trade accounts receivable, net of allowance for doubtful accounts of $50,000 at June 30, 2014 and $40,000 at December 31, 2013	3,876,966	3,803,853
Inventories, net	3,087,557	2,335,291
Prepaid expenses and other current assets	627,375	513,197
Assets from discontinued operations	0	1,509
Total current assets	7,823,922	8,403,616
Property, plant and equipment, net	7,672,749	7,579,556
Intangible assets, net	178,293	184,517
Other assets	119,467	185,595
Total assets	15,794,431	16,353,284
Current liabilities:
Revolving line of credit	2,296,495	0
Equipment line of credit, current portion	0	85,387
Term notes payable, current portion	479,719	335,760
Accounts payable	1,758,083	2,156,031
Accrued expenses & other current liabilities	773,870	436,775
Customer deposits	903,126	341,465
Deferred revenue, current	229,337	248,559
Performance guarantee liability	0	1,000,000
Liabilities from discontinued operations, current	320,056	319,787
Total current liabilities	6,760,686	4,923,764
Long-term liabilities:
Revolving line of credit	0	2,774,495
Equipment line of credit, non-current portion	0	538,707
Term notes payable, non-current portion	1,577,895	1,179,709
Subordinated promissory notes	431,610	417,769
Deferred revenue, non-current	121,255	172,316
Total long-term liabilities	2,130,760	5,082,996
Total liabilities	8,891,446	10,006,760
Commitments and Contingencies
Shareholders' equity:
Preferred stock, $1 par value; 2,000,000 shares authorized, none issued	0	0
Common stock, $.01 par value; 10,000,000 shares authorized; 3,926,491 issued, 2,731,839 outstanding at June 30, 2014 and 3,926,491 issued, 2,722,239 outstanding at December 31,2013	39,265	39,265
Additional paid-in-capital	11,282,665	11,236,236
Treasury stock at cost, 1,194,652 shares at June, 30, 2014 and 1,204,252 at December 31, 2013	(3,259,954)	(3,272,808)
Accumulated other comprehensive income	42,502	42,502
Accumulated deficit	(1,201,493)	(1,698,671)
Total shareholders’ equity	6,902,985	6,346,524
Total liabilities and shareholders’ equity	$ 15,794,431	$ 16,353,284

Consolidated Balance Sheets Parenthetical (Parentheticals) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Allowance for doubtful accounts receivable, current	$ 50,000	$ 40,000
Preferred stock, par value per share	$ 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	2,731,839	2,722,239
Treasury stock, shares	1,194,652	1,204,252

Consolidated Statements of Operations (USD $)	3 Months Ended		6 Months Ended
Consolidated Statements of Operations (USD $)	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net sales	$ 6,253,757	$ 4,880,445	$ 12,283,600	$ 10,523,634
Cost of sales	5,119,734	4,322,779	9,838,291	9,013,820
Gross profit	1,134,023	557,666	2,445,309	1,509,814
Selling and marketing	240,408	246,839	532,080	487,214
General and administrative	543,235	585,345	1,137,866	1,309,475
Research and development	85,694	61,293	182,521	120,695
Total operating expenses	869,337	893,477	1,852,467	1,917,384
Income (loss) from continuing operations	264,686	(335,811)	592,842	(407,570)
Other income (expense):
Interest expense	(70,529)	(196,999)	(140,678)	(207,545)
Other income (expense), net	46,687	7,905	48,998	7,769
Total other expense, net	(23,842)	(189,094)	(91,680)	(199,776)
Income (loss) from continuing operations before income taxes	240,844	(524,905)	501,162	(607,346)
Income tax provision	1,030	2,352,478	2,207	2,267,969
Net income (loss) from continuing operations	239,814	(2,877,383)	498,955	(2,875,315)
Discontinued Operations:
Income (loss) from discontinued operations, net of tax provisions of $0 and $5,031 for the three months ended June 30, 2014 and 2013, respectively and net of tax provisions of $0 and $5,031 for the six months ended June 30, 2014 and 2013 respectively	646	(12,808)	(1,779)	(20,546)
Net income (loss)	$ 240,460	$ (2,890,191)	$ 497,176	$ (2,895,861)
Earnings (loss) per share - basic
Continuing operations	$ 0.09	$ (1.06)	$ 0.18	$ (1.06)
Discontinued operations	$ 0.00	$ 0.00	$ 0.00	$ (0.01)
Earnings (loss) per share - basic	$ 0.09	$ (1.06)	$ 0.18	$ (1.07)
Earnings (loss) per share - diluted
Continuing operations	$ 0.09	$ (1.06)	$ 0.18	$ (1.06)
Discontinued operations	$ 0.00	$ 0.00	$ 0.00	$ (0.01)
Earnings (loss) per share - diluted	$ 0.09	$ (1.06)	$ 0.18	$ (1.07)
Weighted average common shares outstanding - basic	2,723,582	2,704,239	2,722,914	2,704,239
Weighted average common shares outstanding - diluted	2,815,578	2,704,239	2,798,163	2,704,239

Consolidated Statements of Operations Parenthetical (Parentheticals) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Statement of Comprehensive Loss Parenthetical [Abstract]
Tax provision, discontinued operations	$ 0	$ 5,031	$ 0	$ 5,031

Consolidated Statements of Cash Flows (USD $)	6 Months Ended
Consolidated Statements of Cash Flows (USD $)	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities:
Net income (loss)	$ 497,176	$ (2,895,861)
Loss from discontinued operations	1,779	20,546
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
(Gain) loss on sale of property, plant and equipment	(24,500)	0
Depreciation and amortization	750,616	688,089
Non-cash interest expense	13,842	0
Change in allowance for doubtful accounts	10,000	(77,098)
Deferred income taxes	0	2,267,969
Share-based compensation expense	26,548	27,746
Changes in operating assets and liabilities:
Accounts receivable	(83,113)	(39,618)
Inventories	(752,266)	(36,105)
Prepaid expenses and other current assets	(107,017)	132,438
Other non-current assets	66,128	(94,558)
Accounts payable	(397,948)	(211,992)
Accrued expenses and other current liabilities	879,531	242,612
Other non-current liabilities	(51,060)	(38,195)
Net cash provided by (used in) operating activities of continuing operations	829,716	(14,027)
Net cash provided by (used in) operating activites of discontinued operations	(1,509)	(310,301)
Net cash provided by (used in) investing activities	828,207	(324,328)
Cash flows from investing activities:
Purchases of property, plant and equipment	(834,971)	(703,737)
Proceeds from sale of property, plant and equipment	24,500	0
Cash paid for patents and trademarks	(2,613)	(31,385)
Net cash provided by (used in) investing activities from continuing operations	(813,084)	(735,122)
Net cash provided by (used in) investing activities from discontinued operations	0	320,518
Net cash provided by (used in) investing activities	(813,084)	(414,604)
Cash flows from financing activities:
(Payments on) proceeds from revolving line of credit, net	(478,000)	2,174,493
Payments on demand line of credit	0	(800,000)
Proceeds from equipment line of credit	116,905	0
Proceeds from term notes payable	0	1,500,000
Payments on term notes payable	(198,854)	(1,273,742)
Proceeds from stock options exercises	25,575	0
Restricted cash	0	(1,000,000)
Net cash provided by (used in) financing activities from continuing operations	(534,374)	600,751
Net cash provided by (used in) financing activities from discontinued operations	0	(55,002)
Net cash provided by (used in) financing activities	(534,374)	545,749
Net decrease in cash and cash equivalents	(519,251)	(193,183)
Cash and cash equivalents, beginning of period	751,275	508,590
Cash and cash equivalents, end of period	232,024	315,407
Less: cash and cash equivalents of discontinued operations at end of period	0	2,495
Cash and cash equivalents of continuing operations at end of period	232,024	312,912
Supplemental Cash Flow Information (unaudited)
Cash paid for interest	119,229	40,593
Non-cash activities:
Acquisition of equipment with equipment notes	0	272,500
Equipment line of credit converted to term notes payable	740,999	0
Reduction of restricted cash offset by performance guarantee	$ 975,430	$ 0

Note 1 - Basis of Presentation (Notes)	6 Months Ended
Note 1 - Basis of Presentation (Notes)	Jun. 30, 2014
Basis of presentation [Abstract]
Basis of presentation	Basis of Presentation The consolidated financial statements (the "financial statements") include the accounts of Arrhythmia Research Technology, Inc (“ART”) and its subsidiary, Micron Products, Inc. ("Micron" and together with ART, the “Company”). ART’s wholly owned Pennsylvania subsidiary, RMDDxUSA Corp. (“RMDDxUSA”) and that subsidiary’s Prince Edward Island subsidiary, RMDDx Corporation (“RMDDx” and collectively with RMDDxUSA,“WirelessDx”) discontinued operations in the third quarter of 2012. The WirelessDx results are presented herein as discontinued operations. All intercompany balances and transactions have been eliminated in consolidation. 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 accounting principles generally accepted in the United States of America ("GAAP") have been omitted pursuant to such rules and regulations. These financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC on March 21, 2014. Certain reclassifications have been made to prior period amounts to conform to the current year presentation. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. The Company's balance sheet at December 31, 2013 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP for complete financial statements. 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. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Note 2 - Operating Matters & Liquidity (Notes)	6 Months Ended
Note 2 - Operating Matters & Liquidity (Notes)	Jun. 30, 2014
Operating Matters and Liquidity [Abstract]
Operating Matters and Liquidity	Operating Matters and Liquidity The Company experienced net operating losses in 2013 and 2012, primarily as a result of the discontinued WirelessDx operations. The Company believes that cash flows from its operations, together with its existing working capital and other resources, will be sufficient to fund operations at current levels and repay debt obligations over the next twelve months and beyond. The Company continues to develop opportunities within new and existing channels where the Company can maximize its return on investments in capital equipment, research and development, marketing and human resources. On June 26, 2014, the Company entered into a new equipment line of credit for $1.0 million under the Company's multi-year credit facility entered into on March 29, 2013 with a Massachusetts bank (see Note 6).

- Definition

Disclosure of accounting policy for reporting when there is a substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time (generally a year from the balance sheet date). Disclose: (a) pertinent conditions and events giving rise to the assessment of substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time, (b) the possible effects of such conditions and events, (c) management's evaluation of the significance of those conditions and events and any mitigating factors, (d) possible discontinuance of operations, (e) management's plans (including relevant prospective financial information), and (f) information about the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities. If management's plans alleviate the substantial doubt about the entity's ability to continue as a going concern, disclosure of the principal conditions and events that initially raised the substantial doubt about the entity's ability to continue as a going concern would be expected to be considered. Disclose whether operations for the current or prior years generated sufficient cash to cover current obligations, whether waivers were obtained from creditors relating to the company's default under the provisions of debt agreements and possible effects of such conditions and events, such as: whether there is a possible need to obtain additional financing (debt or equity) or to liquidate certain holdings to offset future cash flow deficiencies. Disclose appropriate parent company information when parent is dependent upon remittances from subsidiaries to satisfy its obligations.

+ References+ Details

Note 3 - Earnings per share (Notes)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share

Earnings per Share ("EPS")

Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding. The computation of diluted earnings (loss) per share is similar to the computation of basic earnings (loss) 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 net income (loss) that would result from the assumed conversions of those potential shares.

The following table presents the calculation of both basic and diluted EPS.



	Three months ended June 30,					Six months ended June 30,
	2014		2013			2014			2013
Income (loss) from continuing operations	$	239,814	$	(2,877,383	)	$	498,955		$	(2,875,315	)
Income (loss) from discontinued operations, net of tax	646		(12,808		)	(1,779		)	(20,546		)
Net income (loss) available to common shareholders	$	240,460	$	(2,890,191	)	$	497,176		$	(2,895,861	)

Basic EPS:
Weighted average common shares outstanding	2,723,582		2,704,239			2,722,914			2,704,239

Income (loss) per share - basic
Continuing operations	$	0.09	$	(1.06	)	$	0.18		$	(1.06	)
Discontinued operations	$	—	$	—		$	—		$	(0.01	)
Consolidated basic EPS	$	0.09	$	(1.06	)	$	0.18		$	(1.07	)

Diluted EPS:
Weighted average common shares outstanding	2,723,582		2,704,239			2,722,914			2,704,239
Assumed conversion of net common shares issuable under stock option plans	53,492		—			44,028			—
Assumed conversion of net common shares issuable under warrants	38,504		—			31,221			—
Weighted average common and common equivalent shares outstanding, diluted	2,815,578		2,704,239			2,798,163			2,704,239

Income (loss) per share - diluted
Continuing operations	$	0.09	$	(1.06	)	$	0.18		$	(1.06	)
Discontinued operations	$	—	$	—		$	—		$	(0.01	)
Consolidated diluted EPS	$	0.09	$	(1.06	)	$	0.18		$	(1.07	)

Note 4 - Inventories, net

6 Months Ended

Jun. 30, 2014

Inventories [Abstract]

Inventories, net

Inventories consist of the following:



	June 30, 2014		December 31, 2013
Raw materials	$	915,578	$	947,765
Work-in-process	827,759		266,431
Finished goods	1,344,220		1,121,095
Total	$	3,087,557	$	2,335,291

The cost of silver in inventory that is included in raw materials, work-in-process and finished goods had an estimated cost of $480,600 and $382,332 as of June 30, 2014 and December 31, 2013, respectively. Work-in-process increased $561,328 from December 31, 2013 to June 30, 2014. This increase is primarily due to in-process tooling of $431,660.

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

+ References+ Details

Note 5 - Property, Plant and Equipment, Net

6 Months Ended

Jun. 30, 2014

Property, Plant and Equipment, Net [Abstract]

Property, Plant and Equipment, Net

Property, plant and equipment consist of the following:



	Asset Lives (in years)			June 30, 2014			December 31, 2013
Machinery and equipment	3	to	15	$	13,932,828		$	13,734,528
Building and improvements		20		4,357,247			4,303,156
Vehicles	3	to	5	90,713			94,227
Furniture, fixtures, computers and software	3	to	5	1,338,793			1,317,189
Land				202,492			202,492
Construction in progress				583,154			177,473
Total property, plant and equipment				20,505,227			19,829,065
Less: accumulated depreciation				(12,832,478		)	(12,249,509		)
Property, plant and equipment, net				$	7,672,749		$	7,579,556

For the three and six months ended June 30, 2014, the Company recorded $364,264 and $741,779 of depreciation expense, respectively, as compared to $361,152 and $697,895 for the three and six months ended June 30, 2013, respectively.

- Definition

The entire disclosure for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures.

+ References+ Details

Note 6 - Debt

6 Months Ended

Jun. 30, 2014

Debt [Abstract]

Debt

The following tables set forth the items which comprise debt for the Company:

Lines of credit



	June 30, 2014		December 31, 2013
Revolving line of credit, current	$	2,296,495	$	—
Revolving line of credit, non-current	$	—	$	2,774,495
Equipment line of credit, current portion	$	—	$	85,387
Equipment line of credit, non-current portion	$	—	$	538,707

Long-term debt and promissory notes



	June 30, 2014		December 31, 2013
Term notes payable
Commercial term loan	$	1,153,131	$	1,293,378
Equipment term loan	707,944		—
Equipment notes	196,539		222,091
Term notes payable	2,057,614		1,515,469
Less: current portion	479,719		335,760
Long-term notes payable	$	1,577,895	$	1,179,709

Subordinated promissory notes	$	431,610	$	417,769

The revolving line of credit, equipment line of credit, equipment term loan and the commercial term loan are all under the terms of a multi-year credit facility with a bank entered into on March 29, 2013. The bank facility contains both financial and non-financial covenants.

Revolving line of credit

The revolving line of credit provides for borrowings up to 80% of eligible accounts receivable and 50% of eligible raw materials inventory. The interest rate on the revolver is calculated at the bank's prime rate plus 0.25% (3.50% at June 30, 2014). The revolver has a maturity date of June 2015.

Equipment line of credit and equipment term loan

The equipment line of credit allowed for advances of up to $1.0 million and included a one-year draw period during which payments were interest only. The draw period ended March 29, 2014 and the then outstanding balance on the equipment line of credit of $740,999 was converted to a five-year term loan with monthly payments of $13,890, consisting of principal and interest at a fixed rate of 4.65%.

On June 26, 2014, the Company entered into a new equipment line of credit for $1.0 million under the Company's multi-year credit facility. This equipment line of credit is for the purchase of capital equipment. As of the date of this filing, no amounts have been drawn on the equipment line. The term of this equipment line is six years, maturing on June 26, 2020, inclusive of a maximum one year draw period. Repayment shall consist of monthly interest only payments, equal to the bank's prime rate plus 0.25% as to each advance commencing on the date of the loan through the earlier of: (i) one year from the date of the loan or (ii) the date upon which the equipment line of credit is fully advanced (the “Conversion Date”). On the Conversion Date, principal and interest payments will be due and payable monthly in an amount sufficient to pay the loan in full based upon an amortization schedule commensurate with the remaining term of the loan.

Commercial term loan

The commercial term loan has a five year term with a maturity date in March 2018. The interest rate on the loan is a fixed 4.25% per annum.

Equipment notes

In January 2013, the Company entered into two equipment notes totaling $272,500 with a financing company to acquire production equipment. The notes bear interest at the fixed rate of 4.66% and require monthly payments of principal and interest over the term of five years.

Subordinated promissory notes

In December 2013, the Company completed a private offering in which the Company sold an aggregate of $500,000 in subordinated promissory notes. The notes are unsecured and require quarterly interest-only payments at a rate of 10% per annum. On the second anniversary following issuance, the interest rate increases to 12% per annum. The notes mature in December 2016 at which point the outstanding balance is due in full. The subordinated promissory notes may be prepaid by the Company at any time following the first anniversary thereof without penalty. The notes are subordinated to all indebtedness of the Company pursuant to the bank credit facility.

In connection with the subordinated promissory notes, the Company issued warrants to purchase the Company's common stock. The proceeds were allocated between the notes and warrants on a relative fair value basis resulting in $416,950 allocated to the notes and $83,050 allocated to the warrants as part of Additional-Paid-in-Capital. The total discount on the notes is being recognized as non-cash interest expense over the term of the notes. For the three and six months ended June 30, 2014, the Company recorded $6,921 and $13,842 of non-cash interest expense, respectively, related to the amortization of the discount. The unamortized discount which is net against the outstanding balance of the subordinated promissory notes is $68,390 at June 30, 2014 and $82,231 at December 31, 2013.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References+ Details

Note 7 - Income Taxes	6 Months Ended
Note 7 - Income Taxes	Jun. 30, 2014
Income Taxes [Abstract]
Income Taxes	Income Taxes The tax provisions for the three and six months ended June 30, 2014 and 2013 are attributable to the U.S. Federal, state and foreign income taxes on our continuing operations. The tax provision for the three and six months ended June 30, 2013 also includes the 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 a full valuation allowance against its deferred tax assets at both June 30, 2014 and December 31, 2013.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References+ Details

Note 8 - Commitments and Contingencies	6 Months Ended
Note 8 - Commitments and Contingencies	Jun. 30, 2014
Commitments and Contingencies [Abstract]
Commitments and Contingencies	Commitments and Contingencies Legal matters In the ordinary course of its business, the Company is involved in various legal proceedings involving a variety of matters. The Company does not believe there are any pending legal proceedings that will have a material impact on the Company’s financial position or results of operations. With respect to a specific matter, a third party had asserted a claim of approximately $100,000 against the Company as of December 31, 2013. On April 22, 2014 the case was dismissed with no judgment issued against the Company. Severance agreements In September 2013, the Company's former Chief Financial Officer resigned and entered into a severance agreement with the Company. The Company accrued the full amount of the severance package in the amount of $92,061 (salary and benefits) in the third quarter of 2013. The severance agreement provides for payments through September 2014 and the balance outstanding as of June 30, 2014 and December 31, 2013 is $20,169 and $69,673 and is included within accrued expenses.

Note 9 - Stock Options & Share-based plan

6 Months Ended

Jun. 30, 2014

Stock Options [Abstract]

Stock Options & Share-Based Incentive Plan

Stock Options and Share-Based Incentive Plan

The following table sets forth the stock option transactions for the six months ended June 30, 2014:



	Number of options		Weighted average Exercise Price		Weighted average remaining contractual term (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2013	256,500		$	5.61	5.3	—
Granted	—		—		—	—
Exercised	(9,600	)	3.41		—	—
Forfeited/expired	(56,500	)	7.15		—	—
Outstanding at June 30, 2014	190,400		5.26		6.6	—

Exercisable at June 30, 2014	83,400		$	5.90	4.9	$	118,476
Exercisable at December 31, 2013	120,000		$	6.34	2.5	$	8,850

For the three and six months ended June 30, 2014, share-based compensation expense related to stock options amounted to $15,298 and $26,548, respectively, and is included in general and administrative expenses.

For the three and six months ended June 30, 2014, 9,600 stock options were exercised generating proceeds of $25,575 and $7,161 of other receivables on the Company's balance sheet.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References+ Details

Note 10 - Discontinued Operations

6 Months Ended

Jun. 30, 2014

Discontinued Operations [Abstract]

Discontinued Operations

There was no revenue from discontinued operations for the three and six months ended June 30, 2014 or 2013, respectively. Activity during the above note periods consisted primarily of legal and other fees incurred offset by minor reversals.

At December 31, 2013, the Company had a $1.0 million liability for an unmet performance obligation related to the discontinued operations. This performance obligation was secured by $1.0 million of restricted cash. The performance guarantee liability was carried on the balance sheet of continuing operations, as the liability was guaranteed by ART.

In May 2014, $975,430 was drawn from the restricted cash, satisfying the guarantee on the performance obligation. The balance of $24,570 was returned to ART and recorded as other income (expense) on the condensed consolidated statements of operations.

The assets and liabilities of the discontinued operations are listed below:



	June 30, 2014		December 31, 2013
Cash	$	—	$	1,509
Total current assets from discontinued operations	—		1,509
Total assets from discontinued operations	$	—	$	1,509

Accounts payable and accrued expenses	$	320,056	$	319,787
Total current liabilities from discontinued operations	320,056		319,787
Total liabilities from discontinued operations	$	320,056	$	319,787

On May 8, 2014, RMDDxUSA filed a voluntary petition for relief under Chapter 7 (Liquidation) of the United States Bankruptcy Code in the District of Massachusetts. A trustee was assigned to review the assets and liabilities of the company. The trustee conducted the statutory Meeting of Creditors on June 16, 2014. There has been no further activity in the bankruptcy proceeding.

- Definition

The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 360

-SubTopic 10

-Section 50

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2941-110230

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 205

-SubTopic 20

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 205

-SubTopic 20

-Section 45

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e957-107759

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 205

-SubTopic 20

-Section 45

-Paragraph 4

-URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1012-107759

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 205

-SubTopic 20

-Section 50

-Paragraph 5

-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1510-107760

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 205

-SubTopic 20

-Section 45

-Paragraph 5

-URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1020-107759

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 360

-SubTopic 10

-Section 45

-Paragraph 5

-URI http://asc.fasb.org/extlink&oid=8077374&loc=d3e2443-110228

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 205

-SubTopic 20

-Section 50

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1474-107760

Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 205

-SubTopic 20

-Section 50

-Paragraph 2

-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1436-107760

+ Details

Note 3 - Earnings per share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

The following table presents the calculation of both basic and diluted EPS.



	Three months ended June 30,					Six months ended June 30,
	2014		2013			2014			2013
Income (loss) from continuing operations	$	239,814	$	(2,877,383	)	$	498,955		$	(2,875,315	)
Income (loss) from discontinued operations, net of tax	646		(12,808		)	(1,779		)	(20,546		)
Net income (loss) available to common shareholders	$	240,460	$	(2,890,191	)	$	497,176		$	(2,895,861	)

Basic EPS:
Weighted average common shares outstanding	2,723,582		2,704,239			2,722,914			2,704,239

Income (loss) per share - basic
Continuing operations	$	0.09	$	(1.06	)	$	0.18		$	(1.06	)
Discontinued operations	$	—	$	—		$	—		$	(0.01	)
Consolidated basic EPS	$	0.09	$	(1.06	)	$	0.18		$	(1.07	)

Diluted EPS:
Weighted average common shares outstanding	2,723,582		2,704,239			2,722,914			2,704,239
Assumed conversion of net common shares issuable under stock option plans	53,492		—			44,028			—
Assumed conversion of net common shares issuable under warrants	38,504		—			31,221			—
Weighted average common and common equivalent shares outstanding, diluted	2,815,578		2,704,239			2,798,163			2,704,239

Income (loss) per share - diluted
Continuing operations	$	0.09	$	(1.06	)	$	0.18		$	(1.06	)
Discontinued operations	$	—	$	—		$	—		$	(0.01	)
Consolidated diluted EPS	$	0.09	$	(1.06	)	$	0.18		$	(1.07	)

Note 4 - Inventories, net (Tables)

6 Months Ended

Jun. 30, 2014

Inventory [Abstract]

Inventories, net

Inventories consist of the following:



	June 30, 2014		December 31, 2013
Raw materials	$	915,578	$	947,765
Work-in-process	827,759		266,431
Finished goods	1,344,220		1,121,095
Total	$	3,087,557	$	2,335,291

Note 5 - Property, Plant and Equipment, Net (Tables)

6 Months Ended

Jun. 30, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, Net

Property, plant and equipment consist of the following:



	Asset Lives (in years)			June 30, 2014			December 31, 2013
Machinery and equipment	3	to	15	$	13,932,828		$	13,734,528
Building and improvements		20		4,357,247			4,303,156
Vehicles	3	to	5	90,713			94,227
Furniture, fixtures, computers and software	3	to	5	1,338,793			1,317,189
Land				202,492			202,492
Construction in progress				583,154			177,473
Total property, plant and equipment				20,505,227			19,829,065
Less: accumulated depreciation				(12,832,478		)	(12,249,509		)
Property, plant and equipment, net				$	7,672,749		$	7,579,556

Note 6 - Debt (Tables)

6 Months Ended

Jun. 30, 2014

Debt [Abstract]

Lines of credit



	June 30, 2014		December 31, 2013
Revolving line of credit, current	$	2,296,495	$	—
Revolving line of credit, non-current	$	—	$	2,774,495
Equipment line of credit, current portion	$	—	$	85,387
Equipment line of credit, non-current portion	$	—	$	538,707

Long-term debt and promissory notes



	June 30, 2014		December 31, 2013
Term notes payable
Commercial term loan	$	1,153,131	$	1,293,378
Equipment term loan	707,944		—
Equipment notes	196,539		222,091
Term notes payable	2,057,614		1,515,469
Less: current portion	479,719		335,760
Long-term notes payable	$	1,577,895	$	1,179,709

Subordinated promissory notes	$	431,610	$	417,769

Note 9 - Stock Options & Share-based plan (Tables)

6 Months Ended

Jun. 30, 2014

Stock Options [Abstract]

Stock Option Transactions

The following table sets forth the stock option transactions for the six months ended June 30, 2014:



	Number of options		Weighted average Exercise Price		Weighted average remaining contractual term (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2013	256,500		$	5.61	5.3	—
Granted	—		—		—	—
Exercised	(9,600	)	3.41		—	—
Forfeited/expired	(56,500	)	7.15		—	—
Outstanding at June 30, 2014	190,400		5.26		6.6	—

Exercisable at June 30, 2014	83,400		$	5.90	4.9	$	118,476
Exercisable at December 31, 2013	120,000		$	6.34	2.5	$	8,850

Note 10 - Discontinued Operations (Tables)

6 Months Ended

Jun. 30, 2014

Discontinued Operations [Abstract]

Assets and Liabilities of Discontinued Operations

The assets and liabilities of the discontinued operations are listed below:



	June 30, 2014		December 31, 2013
Cash	$	—	$	1,509
Total current assets from discontinued operations	—		1,509
Total assets from discontinued operations	$	—	$	1,509

Accounts payable and accrued expenses	$	320,056	$	319,787
Total current liabilities from discontinued operations	320,056		319,787
Total liabilities from discontinued operations	$	320,056	$	319,787

- Definition

Tabular disclosure of disposal groups, which may include the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the classification and carrying value of the assets and liabilities comprising the disposal group, and the segment in which the disposal group was reported. Also may include the amount of adjustments to amounts previously reported in discontinued operations such as resolution of contingencies arising from the disposal transaction or the operations of the component prior to disposal.

+ References+ Details

Note 2 - Operating Matters & Liquidity (Details) (USD $)	Jun. 26, 2014
Operating Matters and Liquidity [Abstract]
New equipment line of credit	$ 1,000,000

Note 3 - Earnings per share (Details) (USD $)	3 Months Ended		6 Months Ended
Note 3 - Earnings per share (Details) (USD $)	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Earnings Per Share [Abstract]
Income (loss) from continuing operations	$ 239,814	$ (2,877,383)	$ 498,955	$ (2,875,315)
Income (loss) from discontinued operations, net of tax	646	(12,808)	(1,779)	(20,546)
Net income (loss) available to common shareholders	$ 240,460	$ (2,890,191)	$ 497,176	$ (2,895,861)
Basic EPS:
Weighted average of common shares outstanding	2,723,582	2,704,239	2,722,914	2,704,239
Income (loss) per share - basic
Continuing operations	$ 0.09	$ (1.06)	$ 0.18	$ (1.06)
Discontinued operations	$ 0.00	$ 0.00	$ 0.00	$ (0.01)
Consolidated basic EPS	$ 0.09	$ (1.06)	$ 0.18	$ (1.07)
Diluted EPS:
Weighted average common shares outstanding	2,723,582	2,704,239	2,722,914	2,704,239
Assumed conversion of net common shares issuable under stock option plans	53,492	0	44,028	0
Assumed conversion of net common shares issuable under warrants	38,504	0	31,221	0
Weighted average common and common equivalent shares outstanding, diluted	2,815,578	2,704,239	2,798,163	2,704,239
Income (loss) per share - diluted
Continuing operations	$ 0.09	$ (1.06)	$ 0.18	$ (1.06)
Discontinued operations	$ 0.00	$ 0.00	$ 0.00	$ (0.01)
Consolidated diluted EPS	$ 0.09	$ (1.06)	$ 0.18	$ (1.07)

Note 4 - Inventories, net (Details) (USD $)	6 Months Ended
Note 4 - Inventories, net (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Inventories, net
Raw materials	$ 915,578	$ 947,765
Work-in-process	827,759	266,431
Finished goods	1,344,220	1,121,095
Total	3,087,557	2,335,291
Silver inventory	480,600	382,332
Increase in work-in-process	561,328
In-process tooling	$ 431,660

Note 5 - Property, Plant and Equipment, Net (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Property, Plant and Equipment
Machinery and equipment	$ 13,932,828	$ 13,734,528
Building and improvements	4,357,247	4,303,156
Vehicles	90,713	94,227
Furniture, fixtures, computers and software	1,338,793	1,317,189
Land	202,492	202,492
Construction in progress	583,154	177,473
Total property, plant and equipment	20,505,227	19,829,065
Less: accumulated depreciation	(12,832,478)	(12,249,509)
Property, plant and equipment, net	$ 7,672,749	$ 7,579,556
Minimum asset life (years)
Property, Plant and Equipment
Machinery and equipment	3
Vehicles	3
Furniture, fixtures, computers and software	3
Maximum asset life (years)
Property, Plant and Equipment
Machinery and equipment	15
Vehicles	5
Furniture, fixtures, computers and software	5
Asset life (years)
Property, Plant and Equipment
Building and improvements	20

Note 5 - Property, Plant and Equipment, Net Depreciation Expense (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Depreciation [Abstract]
Depreciation expense	$ 364,264	$ 361,152	$ 741,779	$ 697,895

Note 6 - Debt Lines of credit (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Lines of credit [Abstract]
Revolving line of credit, current	$ 2,296,495	$ 0
Revolving line of credit, non-current	0	2,774,495
Equipment line of credit, current portion	0	85,387
Equipment line of credit, non-current portion	$ 0	$ 538,707

Note 6 - Debt Long-term debt (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Term notes payable [Abstract]
Commercial term loan	$ 1,153,131	$ 1,293,378
Equipment term loan	707,944	0
Equipment notes	196,539	222,091
Term notes payable	2,057,614	1,515,469
Less: current portion	(479,719)	(335,760)
Long-term notes payable	1,577,895	1,179,709
Subordinated Long-term Debt, Noncurrent	$ 431,610	$ 417,769

Note 6 - Debt (Details) (USD $)	Jun. 30, 2014	Jun. 26, 2014	Mar. 31, 2014	Mar. 29, 2014	Dec. 31, 2013	Dec. 19, 2013	Mar. 31, 2013	Mar. 29, 2013
2013 Credit Facility [Abstract]
Percent borrowable of net eligible accounts receivable, Revolving line of credit								80.00%
Percent borrowable of net eligible raw materials inventory, Revolving line of credit								50.00%
Revolving line of credit, interest rate								3.50%
Equipment Line of Credit								$ 1,000,000
Equipment line of credit, outstanding balance at end of draw period				740,999
Equipment line of credit, monthly payment	13,890
Equipment line of credit, interest rate	4.65%
Equipment line of credit, 2014		1,000,000
Equipment line of credit, 2014, interest rate, rate in addition to bank's prime rate		0.25%
Interest Rate on Commercial Term Loan								4.25%
Equipment Notes [Abstract]
Equipment notes							272,500
Equipment notes, interest rate							4.66%
Subordinated Debt [Abstract]
Subordinated Debt						500,000
Subordinated borrowing, Interest rate years 1 and 2						10.00%
Subordinated Borrowing, Interest rate after year 2						12.00%
Subordinated promissory notes, fair value						416,950
Additional-Paid-in-Capital, stock option warrants, subordinated debt						83,050
Non-cash interest expense related to the amortization of the discount	13,842		6,921
Unamortized discount, net against outstanding balance of subordinated promissory notes	$ 68,390				$ 82,231

Note 7 - Income Taxes (Details) (USD $)	6 Months Ended
Note 7 - Income Taxes (Details) (USD $)	Jun. 30, 2013
Income Taxes [Abstract]
Deferred tax assets, valuation allowance	$ 2,267,969

Note 8 - Commitments and Contingencies (Details) (USD $)	3 Months Ended
	Sep. 30, 2013	Jun. 30, 2014	Dec. 31, 2013
Commitments and Contingencies [Line Items]
Legal matters, approximate claim			$ 100,000
Severance Agreement [Abstract]
Severance agreement, Chief Financial Officer	92,061
Severance agreement, outstanding balance		$ 20,169	$ 69,673

Note 9 - Stock Options & Share-based plan Stock Option Transactions (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Number of options
Stock Options
Outstanding	190,400	256,500
Granted	0
Exercised	(9,600)
Forfeited/expired	(56,500)
Exercisable	83,400	120,000
Weighted average Exercise Price
Stock Options
Outstanding	$ 5.26	$ 5.61
Granted	$ 0
Exercised	$ 3.41
Forfeited/expired	$ 7.15
Exercisable	$ 5.90	$ 6.34
Weighted average remaining contractual term (in years)
Stock Options
Outstanding	6.6	5.3
Granted	0
Exercised	0
Forfeited/expired	0
Exercisable	4.9	2.5
Aggregate Intrinsic Value
Stock Options
Outstanding	$ 0	$ 0
Granted	$ 0
Exercised	0
Forfeited/expired	$ 0
Exercisable	$ 118,476	$ 8,850

Note 9 - Stock Options & Share-based plan Share-based Compensation (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014
Share-based Compensation [Abstract]
Share-based compensation expense related to stock options	$ 15,298	$ 26,548
Stock options exercised		9,600
Proceeds generated from stock options exercised		25,575
Other receivables, stock options exercised		$ 7,161

Note 10 - Discontinued Operations (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Assets and liabilities of discontinued operations
Cash	$ 0	$ 1,509
Total current assets from discontinued operations	0	1,509
Total assets from discontinued operations	0	1,509
Accounts payable and accrued expenses	320,056	319,787
Total current liabilities from discontinued operations	320,056	319,787
Total Liabilities from discontinued operations	$ 320,056	$ 319,787

- Definition

For the disposal group, including a component of the entity (discontinued operation), cash includes currency on hand as well as demand deposits with banks or financial institutions. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months.

+ References+ Details

Note 10 - Discontinued Operations Additional Information (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Discontinued Operations Information [Abstract]
Performance guarantee obligation	$ 0	$ 1,000,000
Restricted cash that secured performance obligation		1,000,000
Reduction of restricted cash offset by performance guarantee	975,430
Other income, in relation to performance gaurantee obligation	$ 24,570

hrt-20140630