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Line of Credit
6 Months Ended
Jun. 30, 2011
Line of Credit [Abstract]  
LINE OF CREDIT
(6) LINE OF CREDIT
In February 2011, the Company entered into an amendment to its revolving credit and security agreement with CapitalSource Bank (the “Credit Agreement”) to add Zynex Monitoring Solutions Inc. and Zynex NeuroDiagnostic Inc. to the Credit Agreement and to amend certain financial covenants. The Company has an asset-based revolving line of credit (“RLOC”) under the Credit Agreement that allows borrowing, repayment and re-borrowing, subject to the lesser of the facility cap of $3,500 or 85% of the borrowing base less certain reserved amounts. The borrowing base is generally the net collectible dollar value of the Company’s eligible accounts receivable, as defined. The Credit Agreement bears interest at a floating rate based on the one-month London interbank offered rate (LIBOR), divided by the sum of one minus a measure of the aggregate maximum reserve requirement for “Eurocurrency Liabilities” for the previous month, as defined, plus 4.0%. Interest is payable monthly. As of June 30, 2011, the effective interest rate under the Credit Agreement was 12% (7% interest rate and 5% fees). As of June 30, 2011, $3,204 was outstanding on the Credit Agreement (the remaining amount available for borrowing was $296).
As of June 30, 2011, the Company was current in its interest payments, but was not in compliance with its cash velocity financial covenant, and therefore the amount outstanding on the Credit Agreement is callable at any time by the lender. The Company is working with its lender to amend certain terms on the Credit Agreement, primarily to increase the amount of the facility cap and decrease the interest costs, and has requested a waiver for the June 30, 2011 financial covenant violation. Although the Company expects to enter into an amendment with the lender and obtain a waiver, no assurances can be given. If a waiver is not obtained, the lender can demand immediate payment of amounts outstanding under the Credit Agreement, and restrict or prevent the Company from borrowing while in default, which could have a material adverse impact on the Company’s cash flow and liquidity.