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Business Acquisition
 9 Months Ended
Sep. 30, 2012
Business Acquisition [Abstract]  
BUSINESS ACQUISITION
(3) BUSINESS ACQUISITION

On March 9, 2012, ZND entered into an asset purchase agreement and simultaneously closed a transaction with NeuroDyne to acquire substantially all of NeuroDyne’s assets for the sum of $303 payable at closing ($145 in cash and 266,478 shares of restricted common stock of the Company valued at $158), and an additional $100 in cash paid sixty days from the close date (the “Transaction”). In addition, the transaction also provides for additional contingent consideration, based on a declining percentage of net revenue (ranging from 10% to 0.5%) generated by NeuroDyne products over the next seven years. [The potential undiscounted amount of all future payments that the Company could be required to make under the contingent consideration arrangement is between $0 and $344. The fair value of the contingent consideration arrangement was estimated to be $135 at the acquisition date using a discounted cash flow model. Key assumptions include a discount rate of 24% and a range of NeuroDyne net revenues of between $210 and $3,500 per year. The acquisition was accounted for under the acquisition method of accounting. In accordance with authoritative guidance for business combinations, the contingent consideration is considered to be a liability and accordingly will be subject to further valuation and re-measurement at interim reporting dates with any changes recognized in earnings (Note 6).

NeuroDyne is a manufacturer of advanced medical devices for non-invasive measurement of surface electromyography (“sEMG”) and autonomic nervous systems. The devices are used for evaluation and treatment of neurological and neuromuscular disorders as well as education and research. NeuroDyne’s products include medical instruments, sensors, disposable electrodes and software. The products are sold world wide and are used by healthcare providers, educators and researchers. ZND intends to utilize NeuroDyne’s distribution network for the already developed products within NeuroDyne, subject to the U.S. Food and Drug Administration (“FDA”) regulation, and NeuroDyne sales channels to more rapidly penetrate the neurodiagnostics market.

Allocation of the purchase price was made by the Company among the specific assets and liabilities acquired, as well as among goodwill and other intangible assets identified as acquired by the Company. The goodwill of $251 arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of NeuroDyne and the Company. All of the goodwill was assigned to the Company’s acquiring segment, ZND. Goodwill is expected to be deductible for tax purposes.

 

The estimated fair values allocated to the assets and liabilities acquired at the date of the acquisition were as follows:

 

         

Landlord deposit

   $ 3  

Property and equipment

     42  

Inventory, net

     29  

Tradenames

     72  

Non-compete agreement

     26  

Technology

     135  

Goodwill

     251  

Warranty liability

     (20 ) 
   

 

 

  

Total purchase price

   $ 538  
   

 

 

  

Results of operations of NeuroDyne for the period from acquisition through September 30, 2012 are insignificant. Pro forma disclosure of the results of operations as though the Company and NeuroDyne had combined at January 1, 2012 and 2011 is not presented as this information would not be materially different from the information on the statements of operations as it is currently presented.