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Organization, Nature of Business and Management's Plans | 12 Months Ended
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Dec. 31, 2013
Organization, Nature of Business and Management's Plans | (1) ORGANIZATION, NATURE OF BUSINESS AND MANAGEMENT’S PLANS ORGANIZATION Zynex, Inc. (a Nevada corporation) and its subsidiaries, Zynex Medical, Inc. (ZMI) (a Colorado corporation, wholly-owned), Zynex NeuroDiagnostics, Inc. (ZND) (a Colorado corporation, wholly-owned), Zynex Monitoring Solutions Inc. (ZMS) (a Colorado corporation, wholly-owned), Zynex Billing and Consulting, LLC (ZBC) (a Colorado limited liability company, 80% majority-owned) and Zynex Europe, ApS (ZEU) (a Denmark corporation, wholly-owned), are collectively referred to as the “Company”. The Company’s headquarters are located in Lone Tree, Colorado. NATURE OF BUSINESS ZMI designs, manufactures and markets U.S. Food and Drug Administration (FDA) cleared medical devices that treat chronic and acute pain, as well as activate and exercise muscles for rehabilitative purposes with electrical stimulation. ZND was formed to market, through product development and acquisitions, electromyography (“EMG”), electroencephalography (“EEG”), sleep pattern, auditory and nerve conductivity neurological diagnosis devices to hospitals and clinics worldwide, through the utilization of existing ZMI diagnostic EMG technology. During 2013 and 2012, the primary activities within ZND were product development and sales and marketing. ZND did not produce significant revenue during 2013 or 2012. ZMS was formed to develop and market medical devices for non-invasive cardiac monitoring. ZMS did not produce any revenue during 2013 or 2012. ZEU was formed in 2012 to conduct international sales and marketing for Company products. ZEU did not produce significant revenue in 2013. ZBC was formed in 2012 to provide medical billing and consulting services. ZBC did not produce significant revenue in 2013 or 2012. In 2013 and 2012, the Company generated substantially all of its revenue in North America from sales and rentals of its products to patients, dealers and health care providers. MANAGEMENT’S PLANS The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. For the years ended December 31, 2013 and 2012, the Company reported negative cash flows from operations of $382 and $879, respectively. In addition, the Company reported a net loss of $7,301 for the year ended December 31, 2013 These factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to to continue as a going concern. The Company developed its operating plans for 2013 to emphasize cash flow, under which we made operational billing changes to increase cash collections and implemented various cost modifications to reduce expenses. However, during 2013, the Company encountered industry challenges related to health care reform, including the Affordable Care Act and coverage and reimbursement changes from government and third-party payors, which has caused uncertainty to exist at the medical practitioner level causing a delay and decline in demand for the Company’s ZMI electrotherapy products. In an effort to minimize the impact of health care reform and changes in reimbursement, the Company has made reductions in its fixed expenses by cutting its annual employee costs by approximately $4,200 through headcount reductions. These headcount reductions were executed during the second and third quarters of 2013. The Company also renegotiated its existing building lease, under which, among other things, base rent has been lowered and the Company is now operating in an approximate twelve month free rent period, which began May 1, 2013, and is expected to result in cash savings of approximately $1,500 through April 30, 2014. The Company is monitoring the demand for its ZMI electrotherapy products and will make additional expense adjustments as necessary in future periods. Additionally, the Company recently added new products that are less impacted by insurance reimbursement to its ZMI sales channel and is pursuing other opportunities, including the compound and sale of topical and transdermal pain creams. In ZND, the Company is distributing EEG sleep diagnostic products, mobile sleep diagnostic products and a sleep apnea treatment device in the US, which are all capital goods that are not subject to insurance reimbursement. The Company is also investing in its ZBC division where increased service based revenue is expected going forward. The Company believes these actions will serve to diversify its product mix and further reduce dependency on insurance reimbursement. (1) ORGANIZATION, NATURE OF BUSINESS AND MANAGEMENT’S PLANS (continued) The Company believes that as a result of the restructuring activities completed during the latter part of 2013, the Company’s cash flows from operating activities and limited borrowing availability under the line of credit will be sufficient to fund cash requirements through the next twelve months. The Company’s line of credit decreased from $5,906 at December 31, 2012 to $5,820 at December 31, 2013, primarily driven by expense reductions made during the latter part of 2013. Maximum borrowings under the line of credit are $7,000, with $54 available to borrow as of March 20, 2014 , subject to adjustments to the Company’s accounts receivable borrowing base. As of December 31, 2013, the Company was in default of two financial covenants under its line of credit. The Company received a waiver for one of the financial covenant defaults and is currently in discussions with the lender and expects to receive an additional waiver; however, no assurance can be given. If a waiver is not obtained, in addition to demanding immediate payment of amounts outstanding under the line of credit, the lender can restrict or prevent the Company from borrowing while in default, which could have a material adverse impact the Company’s cash flow and liquidity. The Company’s long-term business plan contemplates organic growth in revenues, through the addition of new products to its sales channel that could mitigate the decline in the ZMI electrotherapy products, and through possible acquisitions. Management believes that its cash flow projections for 2014 are achievable and that sufficient cash will be generated to meet the Company’s operating and financial obligations for the remainder of 2014. However, there is no guarantee that the Company will be able to meet the requirements of its 2014 budget and limit its use of cash.

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