Document and Entity Information
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Document and Entity Information (USD $)
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12 Months Ended | ||
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Dec. 31, 2015
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Mar. 10, 2016
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Jun. 30, 2015
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| Document and Entity Information [Abstract] | |||
| 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-K | ||
| Document Period End Date | Dec. 31, 2015 | ||
| Document Fiscal Year Focus | 2015 | ||
| Document Fiscal Period Focus | FY | ||
| Amendment Flag | false | ||
| Entity Common Stock, Shares Outstanding | 2,816,639 | ||
| Entity Public Float | $ 17,471,600 | ||
| Entity Current Reporting Status | Yes | ||
| Entity Voluntary Filers | No | ||
| Entity Well-known Seasoned Issuer | No |
Consolidated Balance Sheets
Consolidated Balance Sheets (Parenthetical)
Consolidated Statements of Operations and Comprehensive Income (Loss)
Consolidated Statements of Operations and Comprehensive Income (Loss) (Parenthetical)
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Consolidated Statements of Operations and Comprehensive Income (Loss) (Parenthetical) (USD $)
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12 Months Ended | |
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Dec. 31, 2015
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Dec. 31, 2014
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| Consolidated Statements of Operations and Comprehensive Income (Loss) [Abstract] | ||
| Tax provision, discontinued operations | $ 0 | $ 0 |
| Accumulated other comprehensive income reclassification | $ (42,502) | |
Consolidated Statements of Changes in Shareholders' Equity
Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows (Additional Information)
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Consolidated Statements of Cash Flows (Additional Information) (USD $)
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Dec. 31, 2015
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Dec. 31, 2014
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Dec. 31, 2013
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| Consolidated Statements of Cash Flows [Abstract] | |||
| Cash and cash equivalents, end of period | $ 272,291 | $ 209,398 | $ 751,275 |
| Less: cash and cash equivalents of discontinued operations at end of period | 0 | 0 | |
| Cash and cash equivalents of continuing operations at end of period | $ 272,291 | $ 209,398 |
Description of Business
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Description of Business
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12 Months Ended |
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Dec. 31, 2015
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| Description of Business [Abstract] | |
| Description of Business |
Arrhythmia Research Technology®, Inc., (“ART”), through its wholly-owned subsidiary, Micron Products®, Inc. ("Micron", and collectively with ART, the "Company") is a diversified contract manufacturing organization (“CMO”) that produces highly-engineered, innovative components requiring precision machining and injection molding. The Company also manufactures components, devices and equipment for military, law enforcement, automotive and consumer products applications. The Company's capabilities include molding and silver plating of medical sensors, thermoplastic injection molding, customer-specific quick-turn orthopedic implant component manufacturing and custom products for military and law enforcement applications. The Company competes globally, with nearly forty percent of its revenue derived from exports.
ART was founded in 1986, completed an initial public offering in 1988 and shares have been listed on the NYSE MKT since 1992. Its stock trades under the symbol HRT. The Company has grown organically and through acquisitions. Today, the Company has diversified manufacturing capabilities with the capacity to participate in full product life-cycle activities from early stage development and engineering and prototyping to full scale manufacturing as well as packaging and product fulfillment services.
The Company's subsidiary, RMDDxUSA Corp. and its Prince Edward Island subsidiary RMDDx Corporation (collectively "WirelessDx"), discontinued operations in 2012, filed for relief under Chapter 7 (Liquidation) of the United States Bankruptcy Code in May 2014 and in March 2015, the Chapter 7 Order was formally discharged and the case was closed (see Note 12).
Operating matters and liquidity
The revolver under the Company's credit facility has a maturity date of June 2017 (see Note 5). At December 31, 2015, the outstanding balance on the revolver was $1,511,495. The Company believes that cash flows from its operations, together with its existing working capital, the revolver and other resources, will be sufficient to fund operations at current levels and repay debt obligations over the next twelve months and beyond; however, there can be no assurance that the Company will be able to do so.
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Description of Business (Details)
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Description of Business (Details) (USD $)
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12 Months Ended | |
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Dec. 31, 2015
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Dec. 31, 2014
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| Line of Credit Facility [Line Items] | ||
| Percent of revenue derived from exports | 40.00% | |
| Revolving Credit Facility [Member] | ||
| Line of Credit Facility [Line Items] | ||
| Outstanding balance, line of credit | 1,511,495 | $ 2,071,495 |
Accounting Policies
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Accounting Policies
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Dec. 31, 2015
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies | 2. Accounting Policies
Principles of consolidation
The consolidated financial statements (the "financial statements") include the accounts of ART, Micron and WirelessDx. WirelessDx is presented herein as discontinued operations. All intercompany balances and transactions have been eliminated in consolidation.
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 revenue and expenses during the reporting periods. Actual results could differ from those estimates.
Revenue Recognition
Product 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 enters into arrangements containing multiple elements which may include a combination of the sale of molds, tooling, engineering and validation services ("tooling") and production units. The Company has determined that certain tooling arrangements, and the related production units, represent one unit of accounting, based on an assessment of the respective standalone value. When the Company determines that an arrangement represents one unit of accounting, the revenue is deferred over the estimated product life-cycle, based upon historical knowledge of the customer, which is generally three years. The Company carries the sales and tooling costs, associated with the related arrangement, as deferred revenue and other current and non-current assets, respectively, on the Company's balance sheet. As the deferred revenue is amortized to sales, the associated prepaid tooling costs are amortized to cost of sales.
The Company cannot effectively predict short-term or long-term production volume in a consistent and meaningful manner due to the nature of these molds and associated products. Therefore, the Company is unable to account for the transactions under the Units of Production method and management has determined the most appropriate amortization method to be the Straight-Line method.
The Company may from time to time, at the customer's request, enter into a bill and hold arrangement. The Company evaluates the nature of the arrangement including, but not limited to (i) the customer's business purpose, (ii) the transfer of risk of ownership to the customer and (iii) the segregation of inventory, along with other elements in accordance with relevant accounting guidance to determine the appropriate method of revenue recognition for each arrangement.
Revenue for software license sales 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 carrying value of debt approximates fair value since it provides for market terms and interest rates.
Concentration of credit risk
Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of accounts receivable and cash and cash equivalents. 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.
Accounts receivable are customer obligations due under normal trade terms. A large portion of the Company's products are sold to large diversified medical, military and law enforcement 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 credit risk. While the Company has a strong record of collecting on its receivables, the Company maintains Accounts Receivables insurance in order to mitigate concentration of credit risk where our top five customers in revenue constituted 51% of the AR at December 31, 2015 as compared to 55% at December 31, 2014.
During the year ended December 31, 2015, the Company had net sales to two customers constituting 16% and 13% of total 2015 net sales. Accounts receivable from these two customers at December 31, 2015 was 9% each of the total accounts receivable balance at year end. During the year ended December 31, 2014, the Company had net sales to four customers constituting 15%, 13%, 12% and 10%, respectively, of total 2014 net sales. Accounts receivable from the four customers at December 31, 2014 was 11%, 9%, 15% and 14%, respectively, of the total accounts receivable balance at year end.
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.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable represent amounts invoiced by the Company. Management maintains an allowance for doubtful accounts based on information obtained regarding individual accounts and historical experience. Amounts deemed uncollectible are written off against the allowance for doubtful accounts. Bad debts have not had a significant impact on the Company’s financial position, results of operations and cash flows.
Inventories
The Company values its inventory at the lower of average cost, first-in-first-out (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 obsolesce for slow moving inventory.
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.
Assets held for sale
Property classified as held for sale is measured at the lower of its carrying value or fair value less cost to sell. Gains or losses are recognized for any subsequent changes to fair value less cost to sell; however, gains that may be recognized are limited by cumulative losses previously recognized. Property held for sale is not depreciated.
Property is classified as held for sale in the period in which management with the appropriate authority commits to a plan to sell the asset; the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets; an active program to locate a buyer and other actions required to complete the plan of sale have been initiated; the sale of the property or asset within one year is probable and will qualify for accounting purposes as a sale; the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and actions required to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Long-lived assets classified as held for sale are presented separately in the statement of financial position of the current period.
Fair value hierarchy
The Company groups its assets and liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.
Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities. Valuations are obtained from readily available pricing sources.
Level 2 – Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using unobservable inputs to pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.
The Company recognizes transfers between levels at the end of the reporting period.
At December 31, 2015, assets held for sale is the only item in the financial statements reflected at fair value. Assets held for sale are considered level 3. The fair value of assets held for sale was determined using the sales price per a purchase and sale agreement less the estimated cost to sell.
Long-lived and intangible assets
The Company assesses the impairment of long-lived assets and intangible assets with finite lives annually or whenever events or changes in circumstances indicate that the carrying value may not be fully recoverable. Based upon the annual review, the Company recorded impairment charges of $118,318 and $63,087 in 2015 and 2014, respectively.
In 2015, the Company reviewed unamortized costs for patents pending. As a result of this review, the Company determined that the patents pending related to the Triggering Recharging and Wireless Transmission of Remote Patient Monitoring Device, as well as the Seed-Beat Selection Method for Signal-Averaged Electrocardiography were no longer patentable and recorded an impairment charge of $103,287 for the full costs of these patents pending. Additionally, after a review of trade names, the Company determined that the Leominster Tool & Die no longer provided any future economic benefit and recorded an impairment charge of $15,031 for the remaining unamortized balance of the trade names.
In 2014, the Company reviewed unamortized costs for patents pending. As a result of this review, the Company determined that the patent pending related to the Ambulatory Physiological Monitoring with Remote Analysis were no longer patentable and recorded an impairment charge of $56,237 for the full costs of these patents pending. Additionally, the Company recorded an impairment charge of $6,850 related to its tradename PureTrace, therefore, the total impairment was $63,087.
Intangible assets consist of the following:
Amortization expense related to intangible assets, excluding the above noted impairment charge, was $3,235 and $3,974 in 2015 and 2014, respectively. Estimated future annual amortization expense for currently amortizing intangible assets is expected to approximate $1,756.
Income taxes
The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets 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.
The Company follows the provisions of FASB ASC 740, “Accounting for Uncertainty in Income Taxes—An Interpretation of FASB No. 109.” FASB ASC 740 provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements in accordance with SFAS No. 109. Tax positions must meet a “more-likely-than-not” recognition threshold at the effective date to be recognized upon the adoption of FASB ASC 740 and in subsequent periods. No interest and penalties related to uncertain tax positions were accrued at December 31, 2015. The Company’s primary operations are located in the US. Tax years ended December 31, 2012 or later remain subject to examination by the IRS and state taxing authorities.
Share-based compensation
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 share-based grant).
Comprehensive income
In 2015 and 2014, the Company has accumulated other comprehensive income of $0 and $42,502, respectively. In 2015, the change in accumulated comprehensive income was a result of the 2015 bankruptcy filing of RMDDxUSA Corp.
Earnings per share data
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.
Research and development
Research and development expenses include costs directly attributable to conducting research and development programs primarily related to the development of a unique process to improve silver coating during the manufacturing processes, including the design and testing of specific process improvements for certain medical device components. 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.
Recently Issued Accounting Pronouncements
In the normal course of business, management evaluates all new accounting pronouncements issued by the FASB, SEC, Emerging Issues Task Force (“EITF”), or other authoritative accounting bodies to determine the potential impact they may have on the Company’s Consolidated Financial Statements. Based upon this review, except as noted below, management does not expect any of the recently issued accounting pronouncements, which have not already been adopted, to have a material impact on the Company’s Consolidated Financial Statements.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires companies to recognize all leases as assets and liabilities on the consolidated balance sheet. This ASU retains a distinction between finance leases and operating leases, and the classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the current accounting literature. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in a consolidated statement of comprehensive income and a consolidated statement of cash flows is largely unchanged from previous GAAP. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Earlier application is permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its Consolidated Financial Statements.
In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory,” which simplifies the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company is currently assessing the impact of adopting this ASU on its Consolidated Financial Statements.
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” The core principle behind ASU No. 2014-09 is that an entity should recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for delivering goods and services. This model involves a five-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract and recognizing revenue when the entity satisfies the performance obligations. This ASU allows two methods of adoption; a full retrospective approach where historical financial information is presented in accordance with the new standard, and a modified retrospective approach where this ASU is applied to the most current period presented in the financial statements. In August 2015, the FASB issued ASU No 2015-14 “Revenue from Contracts with Customers: Deferral of the Effective Date,” which deferred the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017, with earlier application permitted as of annual reporting periods beginning after December 15, 2016. The Company is currently assessing the financial impact of adopting ASU 2014-09 and the methods of adoption; however, given the scope of the new standard, the Company is currently unable to provide a reasonable estimate regarding the financial impact or which method of adoption will be elected.
In April 2014, the FASB issued ASU No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” which amends the definition of a discontinued operation and requires entities to provide additional disclosures about disposal transactions that do not meet the discontinued operations criteria. The revised ASU changes how entities identify and disclose information about disposal transactions under U.S. GAAP. This ASU is effective prospectively for all disposals (except disposals classified as held for sale before the adoption date) or components initially classified as held for sale in periods beginning on or after December 15, 2014. This ASU is applicable for disposal transactions, if any, that the Company enters into after January 2, 2015. This ASU did not materially impact the Company’s Consolidated Financial Statements.
Reclassification of prior period balances
Amounts in prior year financial statements are reclassified when necessary to conform to the current year presentation.
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Accounting Policies (Policies)
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Accounting Policies (Policies)
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Dec. 31, 2015
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Principles of consolidation | Principles of consolidation
The consolidated financial statements (the "financial statements") include the accounts of ART, Micron and WirelessDx. WirelessDx is presented herein as discontinued operations. All intercompany balances and transactions have been eliminated in consolidation.
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| Use of estimates | 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 revenue and expenses during the reporting periods. Actual results could differ from those estimates.
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| Revenue Recognition | Revenue Recognition
Product 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 enters into arrangements containing multiple elements which may include a combination of the sale of molds, tooling, engineering and validation services ("tooling") and production units. The Company has determined that certain tooling arrangements, and the related production units, represent one unit of accounting, based on an assessment of the respective standalone value. When the Company determines that an arrangement represents one unit of accounting, the revenue is deferred over the estimated product life-cycle, based upon historical knowledge of the customer, which is generally three years. The Company carries the sales and tooling costs, associated with the related arrangement, as deferred revenue and other current and non-current assets, respectively, on the Company's balance sheet. As the deferred revenue is amortized to sales, the associated prepaid tooling costs are amortized to cost of sales.
The Company cannot effectively predict short-term or long-term production volume in a consistent and meaningful manner due to the nature of these molds and associated products. Therefore, the Company is unable to account for the transactions under the Units of Production method and management has determined the most appropriate amortization method to be the Straight-Line method.
The Company may from time to time, at the customer's request, enter into a bill and hold arrangement. The Company evaluates the nature of the arrangement including, but not limited to (i) the customer's business purpose, (ii) the transfer of risk of ownership to the customer and (iii) the segregation of inventory, along with other elements in accordance with relevant accounting guidance to determine the appropriate method of revenue recognition for each arrangement.
Revenue for software license sales 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.
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| 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 carrying value of debt approximates fair value since it provides for market terms and interest rates.
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| Concentration of credit risk | Concentration of credit risk
Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of accounts receivable and cash and cash equivalents. 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.
Accounts receivable are customer obligations due under normal trade terms. A large portion of the Company's products are sold to large diversified medical, military and law enforcement 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 credit risk. While the Company has a strong record of collecting on its receivables, the Company maintains Accounts Receivables insurance in order to mitigate concentration of credit risk where our top five customers in revenue constituted 51% of the AR at December 31, 2015 as compared to 55% at December 31, 2014.
During the year ended December 31, 2015, the Company had net sales to two customers constituting 16% and 13% of total 2015 net sales. Accounts receivable from these two customers at December 31, 2015 was 9% each of the total accounts receivable balance at year end. During the year ended December 31, 2014, the Company had net sales to four customers constituting 15%, 13%, 12% and 10%, respectively, of total 2014 net sales. Accounts receivable from the four customers at December 31, 2014 was 11%, 9%, 15% and 14%, respectively, of the total accounts receivable balance at year end.
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| 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.
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| Accounts receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable represent amounts invoiced by the Company. Management maintains an allowance for doubtful accounts based on information obtained regarding individual accounts and historical experience. Amounts deemed uncollectible are written off against the allowance for doubtful accounts. Bad debts have not had a significant impact on the Company’s financial position, results of operations and cash flows.
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| Inventories | Inventories
The Company values its inventory at the lower of average cost, first-in-first-out (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 obsolesce for slow moving inventory.
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| 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.
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| Assets held for sale | Assets held for sale
Property classified as held for sale is measured at the lower of its carrying value or fair value less cost to sell. Gains or losses are recognized for any subsequent changes to fair value less cost to sell; however, gains that may be recognized are limited by cumulative losses previously recognized. Property held for sale is not depreciated.
Property is classified as held for sale in the period in which management with the appropriate authority commits to a plan to sell the asset; the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets; an active program to locate a buyer and other actions required to complete the plan of sale have been initiated; the sale of the property or asset within one year is probable and will qualify for accounting purposes as a sale; the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and actions required to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Long-lived assets classified as held for sale are presented separately in the statement of financial position of the current period.
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| Fair value heirarchy | Fair value hierarchy
The Company groups its assets and liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.
Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities. Valuations are obtained from readily available pricing sources.
Level 2 – Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using unobservable inputs to pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.
The Company recognizes transfers between levels at the end of the reporting period.
At December 31, 2015, assets held for sale is the only item in the financial statements reflected at fair value. Assets held for sale are considered level 3. The fair value of assets held for sale was determined using the sales price per a purchase and sale agreement less the estimated cost to sell.
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| Long-lived and intangible assets | Long-lived and intangible assets
The Company assesses the impairment of long-lived assets and intangible assets with finite lives annually or whenever events or changes in circumstances indicate that the carrying value may not be fully recoverable. Based upon the annual review, the Company recorded impairment charges of $118,318 and $63,087 in 2015 and 2014, respectively.
In 2015, the Company reviewed unamortized costs for patents pending. As a result of this review, the Company determined that the patents pending related to the Triggering Recharging and Wireless Transmission of Remote Patient Monitoring Device, as well as the Seed-Beat Selection Method for Signal-Averaged Electrocardiography were no longer patentable and recorded an impairment charge of $103,287 for the full costs of these patents pending. Additionally, after a review of trade names, the Company determined that the Leominster Tool & Die no longer provided any future economic benefit and recorded an impairment charge of $15,031 for the remaining unamortized balance of the trade names.
In 2014, the Company reviewed unamortized costs for patents pending. As a result of this review, the Company determined that the patent pending related to the Ambulatory Physiological Monitoring with Remote Analysis were no longer patentable and recorded an impairment charge of $56,237 for the full costs of these patents pending. Additionally, the Company recorded an impairment charge of $6,850 related to its tradename PureTrace, therefore, the total impairment was $63,087.
Intangible assets consist of the following:
Amortization expense related to intangible assets, excluding the above noted impairment charge, was $3,235 and $3,974 in 2015 and 2014, respectively. Estimated future annual amortization expense for currently amortizing intangible assets is expected to approximate $1,756.
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| Income taxes | Income taxes
The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets 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.
The Company follows the provisions of FASB ASC 740, “Accounting for Uncertainty in Income Taxes—An Interpretation of FASB No. 109.” FASB ASC 740 provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements in accordance with SFAS No. 109. Tax positions must meet a “more-likely-than-not” recognition threshold at the effective date to be recognized upon the adoption of FASB ASC 740 and in subsequent periods. No interest and penalties related to uncertain tax positions were accrued at December 31, 2015. The Company’s primary operations are located in the US. Tax years ended December 31, 2012 or later remain subject to examination by the IRS and state taxing authorities.
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| Share-based compensation | Share-based compensation
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 share-based grant).
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| Comprehensive income | Comprehensive income
In 2015 and 2014, the Company has accumulated other comprehensive income of $0 and $42,502, respectively. In 2015, the change in accumulated comprehensive income was a result of the 2015 bankruptcy filing of RMDDxUSA Corp.
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| Earnings per share data | Earnings per share data
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.
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| Research and development | Research and development
Research and development expenses include costs directly attributable to conducting research and development programs primarily related to the development of a unique process to improve silver coating during the manufacturing processes, including the design and testing of specific process improvements for certain medical device components. 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.
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| Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements
In the normal course of business, management evaluates all new accounting pronouncements issued by the FASB, SEC, Emerging Issues Task Force (“EITF”), or other authoritative accounting bodies to determine the potential impact they may have on the Company’s Consolidated Financial Statements. Based upon this review, except as noted below, management does not expect any of the recently issued accounting pronouncements, which have not already been adopted, to have a material impact on the Company’s Consolidated Financial Statements.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires companies to recognize all leases as assets and liabilities on the consolidated balance sheet. This ASU retains a distinction between finance leases and operating leases, and the classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the current accounting literature. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in a consolidated statement of comprehensive income and a consolidated statement of cash flows is largely unchanged from previous GAAP. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Earlier application is permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its Consolidated Financial Statements.
In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory,” which simplifies the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company is currently assessing the impact of adopting this ASU on its Consolidated Financial Statements.
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” The core principle behind ASU No. 2014-09 is that an entity should recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for delivering goods and services. This model involves a five-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract and recognizing revenue when the entity satisfies the performance obligations. This ASU allows two methods of adoption; a full retrospective approach where historical financial information is presented in accordance with the new standard, and a modified retrospective approach where this ASU is applied to the most current period presented in the financial statements. In August 2015, the FASB issued ASU No 2015-14 “Revenue from Contracts with Customers: Deferral of the Effective Date,” which deferred the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017, with earlier application permitted as of annual reporting periods beginning after December 15, 2016. The Company is currently assessing the financial impact of adopting ASU 2014-09 and the methods of adoption; however, given the scope of the new standard, the Company is currently unable to provide a reasonable estimate regarding the financial impact or which method of adoption will be elected.
In April 2014, the FASB issued ASU No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” which amends the definition of a discontinued operation and requires entities to provide additional disclosures about disposal transactions that do not meet the discontinued operations criteria. The revised ASU changes how entities identify and disclose information about disposal transactions under U.S. GAAP. This ASU is effective prospectively for all disposals (except disposals classified as held for sale before the adoption date) or components initially classified as held for sale in periods beginning on or after December 15, 2014. This ASU is applicable for disposal transactions, if any, that the Company enters into after January 2, 2015. This ASU did not materially impact the Company’s Consolidated Financial Statements.
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| Reclassification of prior period balances | Reclassification of prior period balances
Amounts in prior year financial statements are reclassified when necessary to conform to the current year presentation.
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Accounting Policies (Tables)
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Accounting Policies (Tables)
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Dec. 31, 2015
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangibles Assets, Net |
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Accounting Policies (Narrative) (Details)
Accounting Policies (Intangible Assets) (Details)
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Accounting Policies (Intangible Assets) (Details) (USD $)
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12 Months Ended | |
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Dec. 31, 2015
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Dec. 31, 2014
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| Finite-Lived Intangible Assets [Line Items] | ||
| Gross | $ 26,626 | $ 545,133 |
| Accumulated Amortization | 7,981 | 411,111 |
| Net | 18,645 | 134,022 |
| Patents and Trademarks [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Estimated Useful Life (in years) | 10 years | |
| Gross | 26,290 | 414,436 |
| Accumulated Amortization | 7,981 | 394,371 |
| Net | 18,309 | 20,065 |
| Patents and Trademarks Pending [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Gross | 336 | 97,447 |
| Net | 336 | 97,447 |
| Trade Names [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Gross | 33,250 | |
| Accumulated Amortization | 16,740 | |
| Net | $ 16,510 |
Inventories
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Inventories
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015
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| Inventories [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventories | 3. Inventories
Inventories consist of the following:
The total cost of silver in our inventory as raw materials, in work-in-process or as a plated surface on finished goods had an estimated cost of $313,738 and $439,800 in 2015 and 2014, respectively.
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Inventories (Tables)
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Inventories (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015
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| Inventories [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventories, net |
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Inventories (Details)
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Inventories (Details) (USD $)
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Dec. 31, 2015
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Dec. 31, 2014
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|---|---|---|
| Inventories [Abstract] | ||
| Raw materials | $ 775,427 | $ 873,306 |
| Work-in-process | 265,113 | 370,220 |
| Finished goods | 1,078,172 | 1,270,715 |
| Total | 2,118,712 | 2,514,241 |
| Silver inventory | $ 313,738 | $ 439,800 |
Property, Plant and Equipment, Net
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Property, Plant and Equipment, Net
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12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015
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| Property, Plant and Equipment, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment, Net | 4. Property, Plant and Equipment, Net
Property, plant and equipment, net consist of the following:
For the year ended December 31, 2015, the Company recorded $1,461,353 of depreciation expense compared to $1,471,832 for the year ended December 31, 2014. There are no commitments related to the completion of construction in process as of December 31, 2015.
On December 4, 2015, the Company entered into a Letter of Intent to sell the two unoccupied buildings, with a total of approximately 52,000 square feet, and land, at its Fitchburg, Massachusetts campus. Subsequently, on January 13, 2016, the Company entered into a Purchase and Sale Agreement for these buildings. As these buildings are under agreement to be sold, they have been classified as Assets Held for Sale at December 31, 2015. The carrying value of the properties ($665,000) approximated the fair value less the cost to sell. The Company expects the sale of the properties to be completed by the end of 2016 and does not expected any material impact on the statement of operations.
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Property, Plant and Equipment, Net (Tables)
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Property, Plant and Equipment, Net (Tables)
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Dec. 31, 2015
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| Property, Plant and Equipment, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment |
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Property, Plant and Equipment, Net (Narrative) (Details)
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Property, Plant and Equipment, Net (Narrative) (Details) (USD $)
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12 Months Ended | 0 Months Ended | |
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Dec. 31, 2015
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Dec. 31, 2014
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Dec. 04, 2015
item
sqft
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| Depreciation expense | $ 1,461,353 | $ 1,471,832 | |
| Fitchburg, Massachusetts [Member] | |||
| Number of unoccupied buildings with letter of intent to sale | 2 | ||
| Area of unoccupied buildings | 52,000 | ||
Property, Plant and Equipment, Net (Property, Plant and Equipment) (Details)
Debt
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Debt
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Dec. 31, 2015
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| Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | 5. Debt
The following tables set forth the items which comprise debt for the Company:
Bank Debt
The revolving line of credit (the "revolver"), commercial term loan, two equipment term loans and an equipment line of credit are all under the terms of a multi-year credit facility with a bank as detailed below. The debt is secured by substantially all assets of the Company with the exception of real property.
Revolver
The revolver 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% (3.75% at December 31, 2015). The revolver has a maturity date of June 2017. Amounts available to borrow under the revolver are $917,830 at December 31, 2015.
Commercial term loan
The commercial term loan has a five year term with a maturity date of March 2018. The interest rate on the loan is a fixed 4.25% per annum and the loan requires monthly payments of principal and interest of approximately $28,000.
Equipment line of credit and equipment term loans
On March 29, 2013, the Company entered into an equipment line of credit that 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 an equipment term loan with a five-year term, maturing on of March 29, 2019. The equipment term loan requires monthly payments of approximately $14,000, consisting of principal and interest at a fixed rate of 4.65%.
On June 26, 2014, the Company entered into an equipment line of credit that 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 June 26, 2015 and the then outstanding balance on the equipment line of credit of $415,785 was converted to an equipment term loan with a five-year term, maturing on of June 26, 2020. The equipment term loan requires monthly payments of approximately $8,000, consisting of principal and interest at a fixed rate of 4.67%.
On June 19, 2015, the Company entered into a new equipment line of credit for $1.0 million under the Company's multi-year credit facility. At December 31, 2015, the Company has drawn $336,850 on the new equipment line of credit. The term of this equipment line of credit is six years, maturing on June 19, 2021, 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.
Bank covenants
The bank facility contains both financial and non-financial covenants. The financial covenants include maintaining certain debt coverage and leverage ratios. The non-financial covenants 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. The Company was in compliance with all bank covenants as of December 31, 2015.
Other debt
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 4.66% and require monthly payments of principal and interest totaling approximately $5,000 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 required quarterly interest-only payments at a rate of 10% per annum for the first two years, increasing to 12% per annum in December 2015. 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 its March 2013 multi-year bank credit facility.
In connection with the subordinated promissory notes, the Company issued warrants to purchase the Company's common stock (see Note 9). In order to account for the subordinated notes payable and warrants, the Company allocated the proceeds between the notes and warrants on a relative fair value basis. As a result, the Company allocated $416,950 to the notes and $83,050 to the warrants. The total discount on the notes is being recognized as non-cash interest expense over the term of the notes. In the years ended December 31, 2015 and 2014 the Company recorded $27,683 per year of non-cash interest expense related to the amortization of the discount. The unamortized discount which is net against the outstanding balance of the subordinated promissory notes is $26,865 at December 31, 2015.
Future maturities of debt for the years ending December 31 are as follows:
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Debt (Tables)
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Debt (Tables)
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Dec. 31, 2015
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| Summary of Debt |
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| Future Maturities of Debt |
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Debt (Bank Debt Narrative) (Details)
Debt (Other Debt Narrative) (Details)
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Debt (Other Debt Narrative) (Details) (USD $)
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Dec. 31, 2015
item
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Dec. 31, 2014
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Mar. 31, 2013
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Dec. 31, 2013
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| Term Debt And Equipment Notes [Member] | Equipment Term Loans [Member] | ||||
| Debt Instruments [Line Items] | ||||
| Number of debt instruments | 2 | |||
| Debt instrument, face amount | $ 272,500 | |||
| Approximate monthly principal and interest payment | 5,000 | |||
| Debt instrument, term | 5 years | |||
| Debt, stated rate | 4.66% | |||
| Subordinated Promissory Notes [Member] | ||||
| Debt Instruments [Line Items] | ||||
| Debt instrument, face amount | 500,000 | |||
| Interest rate | 12.00% | 10.00% | 10.00% | |
| Debt, fair value | 416,950 | |||
| Fair value of warrants subordinated debt | 83,050 | |||
| Non-cash interest expense | 27,683 | 27,683 | ||
| Unamortized discount | $ 26,865 | |||
Debt (Summary of Debt) (Details)
Debt (Future Minimum of Debt) (Details)
Income Taxes
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Income Taxes
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Dec. 31, 2015
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| Income Taxes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | 6. Income Taxes
The income tax provision consists of the following:
The components of deferred income taxes are as follows:
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax-planning strategies in making this assessment. As of December 31, 2015, the company continues to maintain a valuation allowance against all of its domestic and foreign deferred tax assets.
For the year ended December 31, 2015, the Company has federal and state net operating loss carryforwards totaling $8,195,636 and $8,231,513 respectively, which begin to expire in 2031. The Company also had federal and state tax credit carryovers of $361,000 and $380,000, respectively. The federal and state credits begin to expire in 2027 and 2016, respectively.
The Company files a consolidated federal income tax return. The actual income tax provision differs from applying the Federal statutory income tax rate (34%) to the pre-income tax loss from continuing operations as follows:
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Income Taxes (Tables)
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Income Taxes (Tables)
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Dec. 31, 2015
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| Income Taxes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Provision |
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| Deferred Income Taxes |
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| Federal Income Taxes |
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Income Taxes (Narrative) (Details)
Income Taxes (Income Tax Provision) (Details)
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Income Taxes (Income Tax Provision) (Details) (USD $)
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12 Months Ended | |
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Dec. 31, 2015
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Dec. 31, 2014
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| Current: | ||
| State | $ 932 | $ 2,168 |
| Total current income taxes | 932 | 2,168 |
| Income tax provision | $ 932 | $ 2,168 |
Income Taxes (Deferred Income Taxes) (Details)
Income Taxes (Federal Income Taxes) (Details)
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Income Taxes (Federal Income Taxes) (Details) (USD $)
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12 Months Ended | |
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Dec. 31, 2015
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Dec. 31, 2014
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| Income Taxes [Abstract] | ||
| Tax (benefit) provision computed at statutory rate | $ (145,442) | $ 224,867 |
| Change in valuation allowance | 230,300 | (136,268) |
| State income taxes, net of federal benefit | 615 | 23,475 |
| Permanent differences | 479 | 14,561 |
| Tax credits (federal and state) | (108,194) | (6,630) |
| Utilization of deferred taxes previously recorded | (117,837) | |
| Differences on prior returns (federal and state) | 23,174 | |
| Income tax provision | $ 932 | $ 2,168 |
Employee Benefit Plans
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Employee Benefit Plans
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12 Months Ended |
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Dec. 31, 2015
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| Employee Benefit Plans [Abstract] | |
| Employee Benefit Plans | 7. Employee Benefit Plans
The Company sponsors an Employee Savings and Investment Plan under Section 401(k) of the Internal Revenue Code covering all eligible employees of the Company. Employees can contribute up to 90% of their eligible compensation to the maximum allowable by the IRS. The Company’s matching contributions are at the discretion of the Company. The Company’s matching contributions in 2015 and 2014 were $47,858 and $46,958, respectively.
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Employee Benefit Plans (Details)
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Employee Benefit Plans (Details) (USD $)
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12 Months Ended | |
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Dec. 31, 2015
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Dec. 31, 2014
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| Employee Benefit Plans [Abstract] | ||
| Maximum annual contribution per employee, percent of eligible compensation | 90.00% | |
| Matching 401K contribution | $ 47,858 | $ 46,958 |
Commitments and Contingencies
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Commitments and Contingencies
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12 Months Ended |
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Dec. 31, 2015
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| Commitments and Contingencies [Abstract] | |
| Commitments and Contingencies | 8. 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.
Operating lease agreements
In 2014, the Company entered into two operating leases for office equipment. The leases require future minimum annual lease payments of $7,287 and $1,602 for fiscal years 2016 and 2017, respectively.
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Commitments and Contingencies - (Details)
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Commitments and Contingencies - (Details) (USD $)
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12 Months Ended | |
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Dec. 31, 2014
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Dec. 31, 2015
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| Commitments and Contingencies [Abstract] | ||
| Number of operating lease agreements | 2 | |
| Operating lease payments due in 2016 | $ 7,287 | |
| Operating lease payments due in 2017 | $ 1,602 |
Shareholders' Equity
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Shareholders' Equity
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Dec. 31, 2015
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| Shareholders' Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders' Equity | 9. Shareholders’ equity
Common stock
In 2015, 23,300 shares were issued out of treasury as a result of the exercise of stock options and no warrants were exercised. In 2014, 26,100 and 30,000 shares were issued as a result of the exercise of stock options and warrants, respectively (see below).
No dividends were declared or paid in 2015 or 2014.
Warrants
In connection with the subordinated promissory notes issued in December 2013 (see Note 5), the Company issued warrants to purchase 100,000 shares of the Company’s common stock. The warrants are exercisable during the period commencing six months after issuance and for three years from issuance, at an exercise price equal to $3.51 per share, namely, the closing market price of the Company’s common stock on the day prior to the closing date of the offering. The warrants expire in December 2016. During 2015, there were no warrants exercised. During 2014, the Company received proceeds of $105,300 from the exercise of 30,000 warrants.
As of December 31, 2015, 70,000 warrants remain unexercised.
Stock options and Share-Based Incentive Plan
In March 2010, the Company's Board of Directors adopted the Arrhythmia Research Technology, Inc. 2010 Equity Incentive Plan (the “2010 Plan”). The 2010 Plan authorizes the issuance of an aggregate of 500,000 shares. 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 Company now has one plan providing the Company flexibility to award a mix of stock options, equity incentive grants, performance awards and other types of stock-based compensation to certain eligible employees, non-employee directors, or consultants and under which an aggregate of 500,000 shares have been reserved for such grants. The options granted have either six or ten year contractual terms that vest annually over a five-year term.
At December 31, 2015, there were options to acquire an aggregate of 184,500 shares outstanding; 15,000 from the 2001 Plan and 169,500 from the 2010 Plan. At December 31, 2015, there were 318,000 shares available for future grants under the 2010 Plan, after giving effect to shares which became available for reissuance due to expired or forfeited options.
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model that uses the assumptions noted in the following table. Expected volatilities are based on historical volatility of the Common Stock using historical periods consistent with the expected term of the options. The expected term of options granted under the Company’s equity incentive plan, all of which qualify as “plain vanilla,” is based on the average of the contractual term and the vesting period as permitted under SEC Staff Accounting Bulletin Nos. 107 and 110. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option.
During 2015 and 2014 there were 62,500 and 7,500 new option grants, respectively. The assumptions used to measure the fair value of option grants in 2015 and 2014 were as follows:
The following table sets forth the stock option transactions for the year ended December 31, 2015:
The total intrinsic value of options exercised during 2015 and 2014 were $60,197 and $80,800, respectively. For the years ended December 31, 2015 and 2014, share-based compensation expense related to stock options and the non-cash issuance of common stock amounted to $29,178 and $33,390, respectively, and is included in general and administrative expenses. As of December 31, 2015 and 2014, there was $134,160 and $86,896 of unrecognized compensation costs, respectively, related to non-vested share-based compensation arrangements granted under the stock option plan. This cost is expected to be recognized over a weighted average period of 3.2 years. The weighted average grant date fair value of options issued in 2015 was $1.66.
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Shareholders' Equity (Tables)
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Shareholders' Equity (Tables)
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Dec. 31, 2015
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| Shareholders' Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value of Option Grants |
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| Stock Option Transactions |
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Shareholders' Equity (Narrative) (Details)
Shareholders' Equity (Fair Value of Option Grants) (Details)
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Shareholders' Equity (Fair Value of Option Grants) (Details)
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12 Months Ended | |
|---|---|---|
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Dec. 31, 2014
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Dec. 31, 2015
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| Fair Value, Option, Quantitative Disclosures [Line Items] | ||
| Expected option term, years | 6 years 6 months | |
| Expected volatility factor | 27.00% | |
| Risk-free rate | 0.96% | |
| Minimum [Member] | ||
| Fair Value, Option, Quantitative Disclosures [Line Items] | ||
| Expected option term, years | 4 years | |
| Expected volatility factor | 23.80% | |
| Risk-free rate | 0.90% | |
| Maximum [Member] | ||
| Fair Value, Option, Quantitative Disclosures [Line Items] | ||
| Expected option term, years | 6 years 6 months | |
| Expected volatility factor | 26.70% | |
| Risk-free rate | 1.28% | |
Shareholders' Equity (Stock Option Transactions) (Details)
Earnings per share
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Earnings per share
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Dec. 31, 2015
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| Earnings per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings per Share | 10. Earnings per share
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.
As of December 31, 2015 there were options to purchase 184,500 shares and warrants to purchase 70,000 shares of the Company's common stock outstanding, all of which were anti-dilutive. Therefore, none of these options or warrants were included in the calculation of loss per share in 2015.
As of December 31, 2014 there were options to purchase 165,800 shares and warrants to purchase 70,000 shares of the Company's common stock outstanding. As of December 31, 2014, 47,500 of the options to purchase, and none of the warrants, were anti-dilutive and therefore not included in the calculation of earnings per share in 2014.
The following table shows the calculation of earnings (loss) per share for the years ended December 31, 2015 and 2014:
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Earnings per share (Tables)
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Earnings per share (Tables)
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Dec. 31, 2015
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| Earnings per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Calculation of earnings (loss) per share |
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Earnings per share (Narrative) (Details)
Earnings per share (Calculation of earnings (loss) per share ) (Details)
Industry and Geographic Segments
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Industry and Geographic Segments
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Dec. 31, 2015
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| Industry and Geographic Segments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Industry and Geographic Segments |
11. Industry and Geographic Segments
The Company’s Chief Operating and Decision Maker ("CODM") manages the operations and reviews the results of operations as a single reporting unit. While the Company operates its business as one segment, the Company has diversified manufacturing capabilities as evidenced by its product offerings across several industry categories supporting customers around the globe.
The following table sets forth, for the periods indicated, the consolidated revenue and percentages of revenue from continuing operations derived from the sales of the Company's products and services in certain industries.
The following table sets forth, for the periods indicated, the consolidated revenue and percentages of revenue from continuing operations derived from the sales of all of the Company's products and services by geographic market.
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Industry and Geographic Segments (Tables)
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Industry and Geographic Segments (Tables)
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Dec. 31, 2015
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| Industry and Geographic Segments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sales by Industry Segments |
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| Sales by Geographic Market |
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Industry and Geographic Segments (Sales by Industry Segments) (Details)
Industry and Geographic Segments (Sales by Geographic Market) (Details)
Discontinued Operations
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Discontinued Operations
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Dec. 31, 2015
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| Discontinued Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations | 12. Discontinued Operations
The Company's subsidiary, RMDDxUSA Corp. and its Prince Edward Island subsidiary RMDDx Corporation (collectively "WirelessDx"), discontinued operations 2012, filed for relief under Chapter 7 (Liquidation) of the United States Bankruptcy Code in 2014 and on March 20, 2015, the Chapter 7 Order was formally discharged and the case was closed.
For 2015 net income of $362,610 was recorded from discontinued operations as a result of the write-off of the remaining liabilities of $320,056 and the reversal of accumulated other comprehensive income of $42,553 from cumulative translation adjustments from RMDDx Corporation.
The assets and liabilities of the discontinued operations are listed below:
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Discontinued Operations (Tables)
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Discontinued Operations (Tables)
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Dec. 31, 2015
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| Discontinued Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets and Liabilities of Discontinued Operations |
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Discontinued Operations (Narrative) (Details)
Discontinued Operations (Assets and Liabilities of the Discontinued Operations) (Details)
Subsequent Events
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Subsequent Events
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12 Months Ended |
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Dec. 31, 2015
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| Subsequent Events [Abstract] | |
| Subsequent Events |
13. Subsequent Events
Assets Held for Sale
In January 2016 the Company entered into an agreement to sell two unoccupied buildings and land on its campus in Fitchburg, Massachusetts. These assets have been classified as Assets Held for Sale at December 31, 2015. The carrying value of the properties approximates the fair value less the cost to sell. The Company expects the sale of the properties to be completed by the end of 2016 and does not expect any material impact on the statement of operations.
Appointment of Director
On February 1, 2016, the Company's Board of Directors appointed Mr. Bryan S. Ganz a director of the Company, effective February 1, 2016. A description of Mr. Ganz’s background can be found in the Current Report on Form 8-K filed on February 5, 2016.
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Subsequent Events - (Details)
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Subsequent Events - (Details) (Fitchburg, Massachusetts [Member], Subsequent Event [Member])
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Jan. 31, 2016
item
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Fitchburg, Massachusetts [Member] | Subsequent Event [Member]
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| Subsequent Event [Line Items] | |
| Number of unoccupied buildings with entered into agreement to sale | 2 |