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Organization, Nature of Business and Management's Plans | 12 Months Ended
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Dec. 31, 2014
Organization Consolidation And Presentation Of Financial Statements [Abstract] |
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. In addition, ZMI sells compound transdermal pain creams. ZND was formed to market electromyography (“EMG”), electroencephalography (“EEG”), sleep pattern, auditory and nerve conductivity neurological diagnosis devices to hospitals and clinics worldwide. In 2014, the Company decided to no longer focus on selling this product line. ZND did not produce significant revenue during 2014 or 2013. ZMS was formed to develop and market medical devices for non-invasive cardiac monitoring. ZMS did not produce any revenue during 2014 or 2013. ZEU was formed in 2012 to conduct international sales and marketing for Company products. ZEU did not produce significant revenue in 2014 or 2013. ZBC was formed in 2012 to provide medical billing and consulting services. ZBC produced revenue in 2014 of $411 and $262 in 2013. In 2014 and 2013, 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, 2014 and 2013, the Company reported net losses of $6,199 and $7,301, respectively, and had no available borrowing under its line of credit at December 31, 2014. These losses 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 2014 to emphasize cash flow, under which management made operational billing changes to increase cash collections and implemented various cost modifications to reduce expenses. However, the Company continued to encounter the 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 these challenges, the Company made reductions in its fixed expenses by cutting its annual employee costs by approximately $7,000 through headcount reductions. These headcount reductions began in the second quarter of 2013 and continued in 2014. In addition, in October 2014, the Company negotiated a termination agreement for its existing building lease and a new lease agreement with its landlord relating to its headquarters located in Lone Tree, Colorado. Under the terms of the termination agreement, among other things, the existing headquarters building lease terminated on December 31, 2014; the Company agreed to consolidate its operations into approximately one-third of the total square footage it occupied previously; monthly rental payments were reduced from approximately $129 to $43 for the period from September 1, 2014 through December 31, 2014; and, the terms of the new lease took effect January 1, 2015. The terms of the new lease agreement include, among other things, a term of two years, fixed monthly base rental payments of approximately $49. The Company is monitoring the demand for its ZMI electrotherapy products and will make additional expense adjustments as necessary in future periods. Additionally, in 2014 the Company added the sale of compound topical and transdermal pain creams. (1) ORGANIZATION, NATURE OF BUSINESS AND MANAGEMENT’S PLANS (continued) The Company believes that as a result of the restructuring activities over the past two years, the Company’s cash flows from operating activities, assuming its lender, Triumph Healthcare Finance (the “Lender”) continues to make loan advances, will be sufficient to fund cash requirements through the next twelve months. However, there is no guarantee that the Company will be able to meet the requirements of our 2015 financial plan. The Company is not in compliance with the financial covenants under the terms of its line of credit. In July 2014, the Lender notified the Company that it would no longer make additional loans under the credit agreement and that it was exercising its default remedies under the Credit Agreement, including, among others, accelerating the repayment of all outstanding obligations under the credit agreement and collecting the Company’s bank deposits to apply towards the outstanding obligations. As of March 19, 2015, the Company had approximately $4,497 of outstanding borrowings under the credit agreement. The Company and the Lender continue to negotiate the terms of an accelerated repayment of the amounts outstanding under the credit agreement and the Lender has continued to make additional loans to the Company. However, no assurance can be given that the Lender will continue to make such additional loans or that the parties will agree on a repayment plan acceptable to the Company. The Lender agreed to forbear from the exercise of its rights and remedies under the terms of the credit agreement through June 30, 2015 pursuant to the terms of an extension to the Forbearance Agreement dated March 27, 2015. The Company’s long-term business plan contemplates organic growth in revenues, through the addition of new products such as the ZMS Blood Volume Monitor that could mitigate the decline in sales of the ZMI electrotherapy products. Management believes that its cash flow projections for 2015 are achievable and that sufficient cash will be generated to meet the Company’s operating requirements for the remainder of 2015, assuming that the Lender continues to make additional loans. However, there is no guarantee that the Company will be able to meet the requirements of its 2015 cash flow projection. The Company is actively seeking external financing through the issuance of debt or sale of equity, and the Company is not certain whether any such financing would be available to the Company on acceptable terms, or at all. Any additional debt would require the approval of the Lender. The Company’s dependence on operating cash flow means that risks involved in the Company’s business can significantly affect the Company’s liquidity. Contingencies such as unanticipated shortfalls in revenues or increases in expenses could affect the Company’s projected revenues, cash flows from operations and liquidity, which may force the Company to curtail its operating plan or impede the Company’s ability to grow.

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