Impairment of Assets

12 Months Ended

Dec. 31, 2015

Impairment or Disposal of Tangible Assets Disclosure [Abstract]

Impairment of Assets

(5) Impairment of Assets

During the fourth quarter of 2014, management decided to dispose of a group of components because of a shift in strategy for the Company. The component groups consisted of the inventory and fixed assets associated with the Device Coatings and Cranial Maxillofacial Fixation (CMF) lines of business. Sales for these product lines represented less than 1% of total revenue in both the years ending 2015 and 2014. Gross profit associated with these product lines was less than 1% of total gross profit for both periods. Total assets associated with the two lines at December 31, 2014 included $80,042 of related fixed assets, net of depreciation, and related inventory of $832,507 for a total value of $912,549. These assets were transferred to Assets held for Sale and are classified on the balance sheet at December 31, 2014 as part of “Prepaid and other current assets”. After the impairment provision, the net balance of the Assets Held for Sale was $0 at December 31, 2014.

The sale of the CMF inventory occurred during the first quarter of 2015 and did not result in any tangible payment to the Company. The sale of the Device Coatings line of business occurred in the third quarter of 2015. The terms of the sale called for cash consideration to the Company of approximately $250,000, and additional contingent cash consideration of $100,000, both of which are secured by promissory notes. The gain on the sale will only be recognized when payment on the promissory notes is received. The final terms of the sale of the Device Coatings line of business resulted in an impairment gain of $51,476.

 

During the third quarter of 2015, Intangible Assets were reviewed and found to be impaired. The impact, net of amortization, was $285,224.