ARRHYTHMIA RESEARCH TECHNOLOGY INC /DE/ (Form: 10-Q, Received: 08/13/2015 18:34:48)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

[ x ] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2015 or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______ to ______

001-9731

( Commission file No.)

ARRHYTHMIA RESEARCH TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)



DELAWARE		72-0925679
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)

25 Sawyer Passway

Fitchburg, Massachusetts 01420

(Address of principal executive offices and zip code)

(978) 345-5000

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes X No__

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated filer [ ] Accelerated filer [ ] Non-Accelerated filer [ ] Smaller reporting company [ X ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes __ No X

As of August 13, 2015 there were 2,786,539 shares of the Company’s common stock outstanding.

Arrhythmia Research Technology, Inc.

TABLE OF CONTENTS



Part I		CONDENSED FINANCIAL STATEMENTS	3
	Item 1	Condensed Consolidated Financial Statements	3
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Operations	4
		Condensed Consolidated Statements of Cash Flows	5
		Notes to the Condensed Consolidated Financial Statements	7
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
	Item 3	Quantitative and Qualitative Disclosures about Market Risk	17
	Item 4	Controls and Procedures	18
Part II		OTHER INFORMATION	19
	Item 6	Exhibit Index	19
		SIGNATURES	21

PART I - CONDENSED FINANCIAL STATEMENTS

Item 1. Condensed Consolidated Financial Statements (unaudited)

Arrhythmia Research Technology, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (unaudited)

	June 30, 2015			December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$	284,774		$	209,398
Trade accounts receivable, net of allowance for doubtful accounts of $48,000 at June 30, 2015 and $45,000 at December 31, 2014	4,357,896			3,536,747
Inventories, net	2,490,723			2,514,241
Prepaid expenses and other current assets	595,960			519,582
Total current assets	7,729,353			6,779,968
Property, plant and equipment, net	7,669,062			7,618,901
Intangible assets, net	137,563			134,022
Other assets	343,555			570,357
Total assets	$	15,879,533		$	15,103,248

Liabilities and Shareholders’ Equity
Current liabilities:
Revolving line of credit, current portion	$	—		$	2,071,495
Term notes payable, current portion	576,705			490,341
Accounts payable	2,182,438			1,857,156
Accrued expenses & other current liabilities	610,014			405,975
Customer deposits	113,178			98,110
Deferred revenue, current	293,153			228,363
Liabilities from discontinued operations, current	—			320,056
Total current liabilities	3,775,488			5,471,496
Long-term liabilities:
Revolving line of credit, non-current portion	2,391,495			—
Term notes payable, non-current portion	1,418,096			1,330,755
Subordinated promissory notes	459,294			445,452
Deferred revenue, non-current	360,811			610,430
Total long-term liabilities	4,629,696			2,386,637
Total liabilities	8,405,184			7,858,133

Commitments and Contingencies

Shareholders’ equity :
Preferred stock, $1 par value; 2,000,000 shares authorized, none issued	—			—
Common stock, $.01 par value; 10,000,000 shares authorized; 3,926,491 issued, 2,786,539 outstanding at June 30, 2015 and 3,926,491 issued, 2,778,339 outstanding at December 31, 2014	39,265			39,265
Additional paid-in-capital	11,361,959			11,336,693
Treasury stock at cost, 1,139,952 shares at June 30, 2015 and 1,148,152 shares at December 31, 2014	(3,110,701		)	(3,133,883		)
Accumulated other comprehensive income	—			42,502
Accumulated deficit	(816,174		)	(1,039,462		)
Total shareholders’ equity	7,474,349			7,245,115
Total liabilities and shareholders’ equity	$	15,879,533		$	15,103,248
See accompanying notes to condensed consolidated financial statements.

Arrhythmia Research Technology, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(unaudited)



	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
Net sales	$	5,659,094		$	6,253,757		$	11,517,436		$	12,283,600
Cost of sales	4,626,940			5,119,734			9,688,886			9,838,291
Gross profit	1,032,154			1,134,023			1,828,550			2,445,309

Selling and marketing	262,609			240,408			520,581			532,080
General and administrative	525,577			543,235			1,173,804			1,137,866
Research and development	62,224			85,694			154,785			182,521
Total operating expenses	850,410			869,337			1,849,170			1,852,467

Income (loss) from continuing operations	181,744			264,686			(20,620		)	592,842
Other income (expense):
Interest expense	(69,840		)	(70,529		)	(135,533		)	(140,678		)
Other income (expense), net	3,322			46,687			16,831			48,998
Total other expense, net	(66,518		)	(23,842		)	(118,702		)	(91,680		)
Income (loss) from continuing operations before income taxes	115,226			240,844			(139,322		)	501,162
Income tax provision	—			1,030			—			2,207
Net income (loss) from continuing operations	115,226			239,814			(139,322		)	498,955
Discontinued Operations:
Income (loss) from discontinued operations, net of tax provision of $0 for the three and six months ended June 30, 2015 and 2014	—			646			362,610			(1,779		)
Net income	$	115,226		$	240,460		$	223,288		$	497,176

Earnings (loss) per share - basic
Continuing operations	$	0.04		$	0.09		$	(0.05	)	$	0.18
Discontinued operations	—			—			0.13			—
Earnings per share - basic	$	0.04		$	0.09		$	0.08		$	0.18

Earnings (loss) per share - diluted
Continuing operations	$	0.04		$	0.09		$	(0.05	)	$	0.18
Discontinued operations	—			—			0.13			—
Earnings per share - diluted	$	0.04		$	0.09		$	0.08		$	0.18


Weighted average common shares outstanding - basic	2,781,826			2,723,582			2,780,420			2,722,914
Weighted average common shares outstanding - diluted	2,848,302			2,815,578			2,881,438			2,798,163

See accompanying notes to condensed consolidated financial statements.

Arrhythmia Research Technology, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited)



Six months ended June 30,	2015			2014
Cash flows from operating activities:

Net income	$	223,288		$	497,176
Loss (income) from discontinued operations	(362,610		)	1,779
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Gain on sale of property, plant and equipment	(14,729		)	(24,500		)
Depreciation and amortization	730,013			750,616
Non-cash interest expense	13,842			13,842
Change in allowance for doubtful accounts	3,000			10,000
Share-based compensation expense	19,888			26,548
Changes in operating assets and liabilities:
Accounts receivable	(824,149		)	(83,113		)
Inventories	23,518			(752,266		)
Prepaid expenses and other current assets	(76,378		)	(107,017		)
Other non-current assets	226,802			66,128
Accounts payable	325,282			(397,948		)
Accrued expenses and other current liabilities	283,897			879,531
Other non-current liabilities	(249,619		)	(51,060		)
Net cash provided by (used in) operating activities of continuing operations	322,045			829,716
Net cash provided by (used in) operating activities of discontinued operations	—			(1,509		)
Net cash provided by (used in) operating activities	322,045			828,207

Cash flows from investing activities:
Purchases of property, plant and equipment	(784,157		)	(834,971		)
Proceeds from sale of property, plant and equipment	20,700			24,500
Cash paid for patents and trademarks	(5,528		)	(2,613		)
Net cash provided by (used in) investing activities from continuing operations	(768,985		)	(813,084		)
Net cash provided by (used in) investing activities from discontinued operations	—			—
Net cash provided by (used in) investing activities	(768,985		)	(813,084		)

Cash flows from financing activities:
Proceeds from (payments on) revolving line of credit, net	320,000			(478,000		)
Proceeds from equipment line of credit	415,785			116,905
Payments on term notes payable	(242,080		)	(198,854		)
Proceeds from stock option exercises	28,611			25,575
Net cash provided by (used in) financing activities from continuing operations	522,316			(534,374		)
Net cash provided by (used in) financing activities from discontinued operations	—			—
Net cash provided by (used in) financing activities	522,316			(534,374		)

Net increase (decrease) in cash and cash equivalents	75,376			(519,251		)
Cash and cash equivalents , beginning of period	209,398			751,275
Cash and cash equivalents , end of period	284,774			232,024
Less: cash and cash equivalents of discontinued operations at end of period	—			—
Cash and cash equivalents of continuing operations at end of period	$	284,774		$	232,024
(continued)



	Six months ended June 30,
Supplemental Cash Flow Information (unaudited)	2015		2014
Cash paid for interest	$	111,639	$	119,229
Non-cash activities:
Equipment line of credit converted to term notes payable	$	415,785	$	740,999
Reduction of restricted cash offset by performance guarantee	—		975,430

See accompanying notes to condensed consolidated financial statements.

Arrhythmia Research Technology, Inc. and Subsidiaries

Period Ended June 30, 2015

Notes to the Condensed Consolidated Financial Statements (unaudited)

1. Basis of Presentation

The consolidated financial statements (the "financial statements") include the accounts of Arrhythmia Research Technology, Inc. ^® (“ART”) and its subsidiary, Micron Products, Inc. ^® ("Micron" and together with ART, the “Company”). ART discontinued operations of its wholly-owned Pennsylvania subsidiary, RMDDxUSA Corp. (“RMDDxUSA”) and that subsidiary’s Prince Edward Island subsidiary, RMDDx Corporation (“RMDDx” and collectively with RMDDxUSA,“WirelessDx”) in the third quarter of 2012. In May 2014, RMDDxUSA filed for bankruptcy and the Chapter 7 discharge order was issued on March 20, 2015 and the case was closed (see Note 10). The WirelessDx results are presented herein as discontinued operations. All intercompany balances and transactions have been eliminated in consolidation.

The unaudited interim consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Accordingly, certain information and footnote disclosures normally included in complete financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been omitted pursuant to such rules and regulations. These financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 20, 2015. Certain reclassifications have been made to prior period amounts to conform to the current year presentation.

The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. The Company's balance sheet at December 31, 2014 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP for complete financial statements.

The information presented reflects, in the opinion of the management of the Company, all adjustments necessary for a fair presentation of the financial results for the interim periods presented. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

2. Earnings per Share ("EPS")

Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding. The computation of diluted earnings (loss) per share is similar to the computation of basic earnings (loss) per share except that the denominator is increased to include the average number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. In addition, the numerator is adjusted for any changes in net income (loss) that would result from the assumed conversions of those potential shares.

The following table presents the calculation of both basic and diluted EPS:



	Three months ended June 30,				Six months ended June 30,
	2015		2014		2015			2014
Income (loss) from continuing operations	$	115,226	$	239,814	$	(139,322	)	$	498,955
Income (loss) from discontinued operations, net of tax	—		646		362,610			(1,779		)
Net income available to common shareholders	$	115,226	$	240,460	$	223,288		$	497,176

Basic EPS:
Weighted average common shares outstanding	2,781,826		2,723,582		2,780,420			2,722,914

Income (loss) per share - basic
Continuing operations	$	0.04	$	0.09	$	(0.05	)	$	0.18
Discontinued operations	—		—		0.13			—
Consolidated basic EPS	$	0.04	$	0.09	$	0.08		$	0.18

Diluted EPS:
Weighted average common shares outstanding	2,781,826		2,723,582		2,780,420			2,722,914
Assumed conversion of net common shares issuable under stock option plans	33,546		53,492		68,088			44,028
Assumed conversion of net common shares issuable under warrants	32,930		38,504		32,930			31,221
Weighted average common and common equivalent shares outstanding, diluted	2,848,302		2,815,578		2,881,438			2,798,163

Income (loss) per share - diluted
Continuing operations	$	0.04	$	0.09	$	(0.05	)	$	0.18
Discontinued operations	—		—		0.13			—
Consolidated diluted EPS	$	0.04	$	0.09	$	0.08		$	0.18


3.	Inventories, net

Inventories consist of the following:



	June 30, 2015		December 31, 2014
Raw materials	$	831,795	$	873,306
Work-in-process	383,282		370,220
Finished goods	1,275,646		1,270,715
Total	$	2,490,723	$	2,514,241

The cost of silver in inventory that is included in raw materials, work-in-process and finished goods had an estimated cost of $405,541 and $439,800 as of June 30, 2015 and December 31, 2014 , respectively.


4.	Property, Plant and Equipment, Net

Property, plant and equipment consist of the following:



	Asset Lives (in years)			June 30, 2015			December 31, 2014
Machinery and equipment	3	to	15	$	14,848,484		$	14,608,949
Building and improvements	5	to	25	4,499,899			4,360,114
Vehicles	3	to	5	90,713			90,713
Furniture, fixtures, computers and software	3	to	5	1,426,071			1,349,931
Land				202,492			202,492
Construction in progress				697,926			568,234
Total property, plant and equipment				21,765,585			21,180,433
Less: accumulated depreciation				(14,096,523		)	(13,561,532		)
Property, plant and equipment, net				$	7,669,062		$	7,618,901

For the three months ended June 30, 2015 and 2014, the Company recorded depreciation expense of $372,637 and $364,264 , respectively. For the six months ended June 30, 2015 and 2014 , the Company recorded depreciation expense of $728,025 and $741,779 , respectively.


5.	Intangible Assets, Net

The Company assesses the impairment of long-lived assets and intangible assets with finite lives annually or whenever events or changes in circumstances indicate that the carrying value may not be fully recoverable. For the six months ended June 30, 2015, no impairment was required.

Intangible assets consist of the following:



		June 30, 2015						December 31, 2014
	Estimated Useful Life (in years)	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Patents and trademarks	11	$	414,437	$	395,250	$	19,187	$	414,436	$	394,371	$	20,065
Patents and trademarks pending	—	102,975		—		102,975		97,447		—		97,447
Trade names	7	33,250		17,849		15,401		33,250		16,740		16,510
Total intangible assets		$	550,662	$	413,099	$	137,563	$	545,133	$	411,111	$	134,022

For the three and six months ended June 30, 2015 and 2014, the Company recorded amortization expense of $994 and $1,988 , respectively.


6.	Debt

The following table sets forth the items which comprise debt for the Company:



	June 30, 2015		December 31, 2014
Revolving line of credit	$	2,391,495	$	2,071,495
Subordinated promissory notes	$	459,294	$	445,452

Term notes payable:
Commercial term loan	$	863,612	$	1,009,977
Equipment term loans	987,574		640,734
Equipment notes	143,615		170,385
Total term notes payable	$	1,994,801	$	1,821,096

Total Debt	$	4,845,590	$	4,338,043

Bank Debt

The revolving line of credit (the "revolver"), commercial term loan, two equipment term loans and an equipment line of credit are all under the terms of a multi-year credit facility with a bank as detailed below. The bank facility contains both financial and non-financial covenants, all of which the Company is in compliance with at June 30, 2015 .

Revolver

The revolver provides for borrowings up to 80% of eligible accounts receivable and 50% of eligible raw materials inventory. The interest rate on the revolver is calculated at the bank's prime rate plus 0.25% ( 3.50% at June 30, 2015 ). The original maturity date of the revolver was June 30, 2015, therefore, as of December 31, 2014 the balance of the revolver was classified as a current liability. In June 2015, the revolver was extended for an additional two-year period maturing June 30, 2017 and is therefore classified as a long-term liability on the Company's balance sheet at June 30, 2015 .

Commercial term loan

The commercial term loan has a five year term with a maturity date in March 2018. The interest rate on the loan is a fixed 4.25% per annum, and requires monthly payments of approximately $28,000 .

Equipment line of credit and equipment term loans

The original equipment line of credit allowed for advances of up to $1.0 million and included a one-year draw period during which payments were interest only. The draw period ended March 29, 2014 and the then outstanding balance on the equipment line of credit of $740,999 was converted to an equipment term loan with a five-year term, maturing on of March 29, 2019. The equipment term loan requires monthly payments of approximately $14,000 , consisting of principal and interest at a fixed rate of 4.65% .

On June 26, 2014, the Company entered into an equipment line of credit that allowed for advances of up to $1.0 million and included a one-year draw period during which payments were interest only. The draw period ended June 26, 2015 and the then outstanding balance on the equipment line of credit of $415,785 was converted to an equipment term loan with a five-year term, maturing on of June 26, 2020. The equipment term loan requires monthly payments of approximately $8,000 , consisting of principal and interest at a fixed rate of 4.67% .

On June 19, 2015, the Company entered into a new equipment line of credit for $1.0 million under the Company's multi-year credit facility. At June 30, 2015 , no amounts had been drawn on the new equipment line of credit. The term of this equipment line of credit is six years, maturing on June 19, 2021, inclusive of a maximum one-year draw period. Repayment shall consist of monthly interest only payments, equal to the bank's prime rate plus 0.25% as to each advance commencing on the date of the loan through the earlier of: (i) one year from the date of the loan or (ii) the date upon which the equipment line of credit is fully advanced (the “Conversion Date”). On the Conversion Date, principal and interest payments will be due and payable monthly in an amount sufficient to pay the loan in full based upon an amortization schedule commensurate with the remaining term of the loan.

Other Debt

Equipment notes

In January 2013, the Company entered into two equipment notes totaling $272,500 with a financing company to acquire production equipment. The notes bear interest at the fixed rate of 4.66% and require monthly payments of principal and interest of approximately $5,000 over a five year term maturing in January 2018.

Subordinated promissory notes

In December 2013, the Company completed a private offering in which the Company sold an aggregate of $500,000 in subordinated promissory notes. The notes are unsecured and require quarterly interest-only payments at a rate of 10% per annum. On the second anniversary following issuance, the interest rate increases to 12% per annum. The notes mature in December 2016 at which point the outstanding balance is due in full. The subordinated promissory notes may be prepaid by the Company at any time following the first anniversary thereof without penalty. The notes are subordinated to all indebtedness of the Company pursuant to the bank credit facility.

In connection with the subordinated promissory notes, the Company issued warrants to purchase the Company's common stock at $3.51 per share. The warrants expire in December 2016. The proceeds were allocated between the notes and warrants on a relative fair value basis resulting in $416,950 allocated to the notes and $83,050 allocated to the warrants as part of Additional-Paid-in-Capital. The total discount on the notes is being recognized as non-cash interest expense over the term of the notes. For the three and six months ended June 30, 2015 and 2014 , the Company recorded $6,921 and $13,842 , respectively, of non-cash interest expense related to the amortization of the discount. The unamortized discount which is net against the outstanding balance of the subordinated promissory notes is $40,706 at June 30, 2015 and $54,548 at December 31, 2014 .

7. Income Taxes

The tax provisions for the three and six months ended June 30, 2015 and 2014 are attributable to the U.S. federal and state income taxes on our continuing operations. The Company has a full valuation allowance against its deferred tax assets at June 30, 2015 and December 31, 2014 . Management expects to reevaluate the allowance on its deferred tax assets at December 31, 2015.

The Company has federal and state net operating loss carryforwards totaling $7,752,000 and $7,202,000 , respectively, which begin to expire in 2030. The Company also had federal and state tax credit carryovers of $243,000 and $281,000 respectively. The federal and state tax credits begin to expire in 2026 and 2015, respectively. During the first quarter of 2015, the Company's subsidiary, RMDDxUSA, was formally discharged in its bankruptcy proceedings. The tax attributes associated with this subsidiary expired upon the finalization of the bankruptcy. As a result, the Company's available foreign and state net operating loss carryforwards have been reduced by $1,039,000 and $4,315,000 , respectively.

8. Commitments and Contingencies

Legal matters

In the ordinary course of its business, the Company is involved in various legal proceedings involving a variety of matters. The Company does not believe there are any pending legal proceedings that will have a material impact on the Company’s financial position or results of operations.

Off-balance sheet arrangements

In 2014, the Company entered into two operating leases for office equipment. Lease expense under all operating leases was approximately $1,822 for the three months ended June 30, 2015 and $3,644 for the six months ended June 30, 2015 and $0 for the same periods in 2014 .

9. Stock Options and Share-Based Incentive Plan

Options

The following table sets forth the stock option transactions for the six months ended June 30, 2015 :



	Number of options		Weighted average Exercise Price		Weighted average remaining contractual term (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2014	165,800		$	5.58	6.09	$	305,124
Granted	25,000		7.74
Exercised	(8,200	)	3.49
Forfeited	(7,500	)	6.45
Expired	—		—
Outstanding at June 30, 2015	175,100		5.95		5.62	$	277,863

Exercisable at June 30, 2015	102,600		$	6.01	4.16	$	167,218
Exercisable at December 31, 2014	74,400		$	6.07	4.75	$	119,342

For the six months ended June 30, 2015 and 2014 , share-based compensation expense related to stock options amounted to $19,888 and $26,548 , respectively, and is included in general and administrative expenses.

For the six months ended June 30, 2015, 25,000 options were granted, 7,500 options were forfeited. Additionally, 8,200 options were exercised generating proceeds of $28,611 .

For the six months ended June 30, 2014, there we no new grants and 56,500 options expired. Additionally, 9,600 options were exercised generating proceeds of $25,575 .

Warrants

For the six months ended June 30, 2015 and 2014 , there were no warrants exercised. As of June 30, 2015 , 70,000 warrants remain unexercised.

10. Discontinued Operations

On May 8, 2014, RMDDxUSA filed a voluntary petition for relief under Chapter 7 (Liquidation) of the United States Bankruptcy Code in the District of Massachusetts. A trustee was assigned to review the assets and liabilities of the company. At December 31, 2014, there were no assets and $320,056 of liabilities remaining on the balance sheet.

On March 20, 2015, the Chapter 7 discharge order was issued by the assigned trustee and the case was closed. For the three months and six months ended June 30, 2015 , net income of $0 and $362,610 , respectively, net of tax, was recorded from discontinued operations as a result of the write off of the remaining liabilities of $320,056 and the reversal of other comprehensive income of $42,502 from cumulative translation adjustments from RMDDx Corporation.

11. Subsequent Events

Appointment of Director

On July 22, 2015, the Company's Board of Directors appointed Mr. Marco F. Benedetti to serve as a director of the Company, effective July 22, 2015. A description of Mr. Benedetti's background can be found in the Current Report on Form 8-K filed on July 23, 2015.

Amendment to Certificate of Incorporation

At the Company's Annual Meeting on July 1, 2015, the Shareholders approved an amendment to the Company's Certificate of Incorporation to revise the terms of the 2,000,000 shares of preferred stock, $1.00 par value, to "blank check" preferred stock $0.001 par value ("Blank Check Preferred") in order to simplify the current terms of the 2,000,000 shares of Serial Preferred Stock ("Serial Preferred Stock") but not to otherwise affect the current authority of the Board to issue up to 2,000,000 shares of the Serial Preferred Stock.

The Amendment became effective upon the filing of the Certificate of Amendment with the Delaware Secretary of State which was filed on July 10, 2015.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. There are a number of factors that could cause the Company’s actual results to differ materially from those forecasted or projected in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Company is under no obligation and does not intend to update, revise or otherwise publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of any unanticipated events. More information about factors that potentially could affect the Company's financial results is included in the Company's filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2014 .

Critical Accounting Policies

The critical accounting policies utilized by the Company in preparation of the accompanying financial statements are set forth in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 , under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. There have been no material changes to these policies since December 31, 2014 .

Overview

Arrhythmia Research Technology ^® , Inc., a Delaware corporation ("ART"), through its wholly-owned Massachusetts subsidiary, Micron Products ^® , Inc. (“Micron” and together with ART, the "Company") is a diversified contract manufacturing organization (CMO) that produces highly-engineered, innovative medical device technologies requiring precision machining and injection molding. The Company also manufactures components, devices and equipment for military, law enforcement, industrial and consumer product applications. The Company is engaged in the production and sale of silver/silver chloride coated and conductive resin sensors used as consumable component parts in the manufacture of integrated disposable electrophysiological sensors. These disposable medical devices are used worldwide in the monitoring of electrical signals of patients in various medical applications. The Company's orthopedic implant manufacturing operation produces quick-turn, high volume and patient-specific finished orthopedic implants. The Company provides custom thermoplastic injection molding services and an array of design, engineering, production and program management for its OEM customers.

The Company discontinued operations of its wholly-owned Pennsylvania subsidiary, RMDDxUSA Corp. ("RMDDxUSA") and that subsidiary's Prince Edward Island subsidiary, RMDDx Corporation ("RMDDx" and collectively with RMDDxUSA, “WirelessDx”) in the third quarter of 2012. The results of WirelessDx are presented as discontinued operations throughout the financial statements and footnotes in this Form 10-Q.

On May 8, 2014, RMDDxUSA filed a voluntary petition for relief under Chapter 7 (Liquidation) of the United States Bankruptcy Code in the District of Massachusetts and a trustee was assigned to review the assets and liabilities of the company. On March 20, 2015, the Chapter 7 discharge order was issued by the assigned trustee and the case was closed.

Results of Operations

The following table sets forth for the periods indicated, the percentages of the net sales represented by certain items reflected in the Company's statements of operations.



	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
Net sales	100.0		%	100.0		%	100.0		%	100.0		%
Cost of sales	81.8			81.9			84.1			80.1
Gross profit	18.2		%	18.1		%	15.9		%	19.9		%
Selling and marketing	4.6			3.8			4.5			4.3
General and administrative	9.3			8.7			10.2			9.3
Research and development	1.1			1.4			1.3			1.5
Other expense	(1.2	)		(0.4	)		(1.1	)		(0.8	)
Income (loss) from continuing operations before income taxes	2.0			3.8			(1.2	)		4.0
Income tax provision	—			—			—			—
Income (loss) from continuing operations	2.0			3.8			(1.2	)		4.0
Income from discontinued operations	—			—			3.1			—
Net income	2.0		%	3.8		%	1.9		%	4.0		%

Net Sales

The Company's consolidated net sales for the three months ended June 30, 2015 was $5,659,094 , a decrease of $594,663 , or 9.5% , when compared to the consolidated net sales of $6,253,757 for the three months ended June 30, 2014 .

The decrease in net sales for the three months ended June 30, 2015 was due primarily to a decrease in sensors net sales. This decrease was the result of a 28.3% decrease in order volume as compared to the same period in 2014 which represented the highest quarterly sensor volume for the previous five year period. The lower volume was due in part to reduced demand from a large customer who notified the Company in the first quarter to expect lower demand in 2015 versus 2014. Additionally, silver surcharge billed decreased 45.1% due to the decrease in volume as well as a 15.8% decrease in the weighted average price of silver for the three months ended June 30, 2015, as compared to the same period in 2014.

The decreases in net sales were partially offset by a 52.3% increase in net sales of custom thermoplastic injection molding for the three months ended June 30, 2015, due to increased order volume for military and law enforcement as well as automotive components. Net sales of orthopedic implant components increased 1.0% for the three months ended June 30, 2015 as compared to the same period in 2014.

The Company's consolidated net sales for the six months ended June 30, 2015 was $11,517,436 , a decrease of $766,164 , or 6.2% , when compared to the consolidated net sales of $12,283,600 for the six months ended June 30, 2014 .

The decrease in net sales for the six months ended June 30, 2015, was due primarily to a decrease in sensors net sales. The decrease in sensors net sales was due to a 7.1% decrease in volume due in part to reduced demand from a large customer who notified the Company in the first quarter to expect lower demand in 2015 versus 2014. Silver surcharge billed decreased 30.5% due to the decrease in volume as well as a 16.8% decrease in the average price of silver for the six months ended June 30, 2015, as compared to the same period in 2014. Net sales of orthopedic implant components decreased 14.9% for the six months ended June 30, 2015 as compared to the same period in 2014 due primarily to production delays encountered in the first quarter of 2015. The production delays were addressed and led to measurable progress in the second quarter of 2015. Additionally, 2014 benefited from $250,000 of Predictor license sales. There were no Predictor sales in 2015.

The decreases in net sales were partially offset by a 39.1% increase in net sales of custom thermoplastic injection molding for the six months ended June 30, 2015 due to largely to increased order volume of automotive as well as military and law enforcement components.

Gross Profit

The Company's gross profit for the three months ended June 30, 2015 was $1,032,154 , a decrease of $101,869 , or 9.0% , when compared to gross profit of $1,134,023 for the same period in 2014 . Gross profit as a percentage of sales for the three months ended June 30, 2015 increased to 18.2% or 0.1 points from 18.1% for the three months ended June 30, 2014 . Although sensor sales decreased for the three months ended June 30, 2015 , the sensor gross margin increased 5.4 points when compared to the same period in 2014. This was offset by a 6.6 point decrease in gross margin related to orthopedic implant components due primarily to product mix. Additionally, increased expenditures of $137,472 in our manufacturing quality function to support the Company's growth strategy in the three months ended June 30, 2015 , reduced gross profit when compared to the prior period.

Gross profit for the six months ended June 30, 2015 was $1,828,550 , a decrease of $616,759 , or 25.2% , when compared to gross profit of $2,445,309 for the same period in 2014. Gross profit as a percentage of sales decreased 4.0 points from 19.9% for the six months ended June 30, 2014 . The decrease in gross profit was due primarily to an 8.6 point decrease in gross margin related to orthopedic implant components as a result of both product mix as well as production delays encountered in the first quarter of 2015. For the six months ended June 30, 2014 , gross profit included $250,000 from net sales of Predictor licenses. Additionally, increased expenditures of $253,840 in the Company's manufacturing quality function to support its growth strategy in the six months ended June 30, 2015 , resulted in a decrease to gross profit when compared to the prior period.

Selling and Marketing

The Company's consolidated selling and marketing expenses amounted to $ 262,609 ( 4.6 % of net sales) for the three months ended June 30, 2015 as compared to $ 240,408 ( 3.8 % of net sales) for the three months ended June 30, 2014 , an increase of $ 22,201 , or 9.2% . For the three months ended June 30, 2015 , marketing and travel expenses increased $14,769 due in part to travel to trade shows related to the Company's orthopedic implant components. The increase was also due in part to the impact of a second quarter 2014 refund of a consulting fee incurred in 2013. These increases were partially offset by a decrease in commissions of $11,627 due to lower net sales as compared to the same period in the prior year.

The Company's consolidated selling and marketing expenses amounted to $520,581 ( 4.5% of net sales) for the six months ended June 30, 2015 as compared to $532,080 ( 4.3% of net sales) for the six months ended June 30, 2014 , a decrease of $11,499 , or 2.2% . For the six months ended June 30, 2015 , travel expenses decreased $15,293 due in part to decreased international travel and travel to trade shows. Additionally, commissions decreased $15,840 due to lower net sales as compared to the same period in the prior year. These decreases were partially offset by the impact of a second quarter 2014 refund of a consulting fee incurred in 2013.

General and Administrative

The Company's consolidated general and administrative expenses decreased to $ 525,577 ( 9.3 % of net sales) for the three months ended June 30, 2015 as compared to $ 543,235 ( 8.7 % of net sales) for the three months ended June 30, 2014 , a decrease of $ 17,658 , or 3.3% . The decrease in consolidated general and administrative expenses for three months ended June 30, 2015 was due in part to an $18,176 decrease in wages, taxes, and benefits due in part to the departure of the Vice President of Human Resources in November 2014, partially offset by increases to executive compensation. Additionally, the Company recorded $35,000 less in bonus accruals. These decreases were partially offset by increases of $7,138 in legal fees due in part to the amendment to the certificate of incorporation and $6,501 of general property and liability insurance due to policy renewals. Additionally, directors' fees increased $5,417 as a result of adding a new member to the Company's Board of Directors in April 2015. There were multiple smaller variances in accounting fees, investor relations and consulting fees for the three months ended June 30, 2015 versus the same period in the prior year.

The Company's consolidated general and administrative expenses increased to $1,173,804 ( 10.2% of net sales) for the six months ended June 30, 2015 as compared to $1,137,866 ( 9.3% of net sales) for the six months ended June 30, 2014 , an increase of $35,938 , or 3.2% . The increase in consolidated general and administrative expenses for the six months ended June 30, 2015 was due in part to $22,761 related to the engagement of an investor relations firm in June 2014. Additionally, accounting fees and other related costs increased $19,745, due in part to increased software expenses as well as costs related to insuring the Company's trade accounts receivable. Consulting fees also increased $10,418 due largely to professional services related to strategic planning. Insurance expense increased $12,398 due to general property and liability insurance policy renewals. Additionally, the Company incurred an aggregate increase of approximately $15,000 in wages, taxes, and benefits, legal expenses and directors' compensation. These increases were partially offset by $35,000 less in bonus accruals as well as a reduction in bank fees of $10,283 over the same period in the prior year.

Research and Development

The Company's consolidated research and development expenses decreased to $ 62,224 ( 1.1 % of net sales) for the three months ended June 30, 2015 as compared to $ 85,694 ( 1.4 % of net sales) for the three months ended June 30, 2014 , a decrease of $ 23,470 , or 27.4% . The decrease is due to a decrease of $25,604 for internal research and development costs for the development of new products and capabilities related to medical device components.

The Company's consolidated research and development expenses decreased to $154,785 ( 1.3% of net sales) for the six months ended June 30, 2015 as compared to $182,521 ( 1.5% of net sales) for the six months ended June 30, 2014 , a decrease of $27,736 , or 15.2% . The net decrease is due to a reduction in wages, taxes and benefits of $38,950 due primarily to turnover of two employees partially offset by an increase of $10,263 for internal research and development costs for the development of new products and capabilities related to medical device components.

The Company has also dedicated resources to customer funded research and development of new products in the military and law enforcement industry.

Other Income (Expense)

Other expense, net increased to $66,518 for the three months ended June 30, 2015 , as compared to $23,842 , for three months ended June 30, 2014 , an increase of $42,676 . The increase in other expense for the three months ended June 30, 2015 as compared to the same period in 2014 was partially due to a decrease of $20,800 from the gain on the sale of fixed assets.

Other expense, net increased to $118,702 for the six months ended June 30, 2015 as compared to $91,680 for the six months ended June 30, 2014 , an increase of $27,022 . The increase in other expense for the six months ended June 30, 2015 as compared to the same period in 2014 was partially due to a decrease of $8,094 from the gain on the sale of fixed assets and partially offset by a decrease in interest expense of $6,094.

For both the three and six months ended June 30, 2015, the Company recorded other income of $23,423 as a result of a refund of the remaining portion of the performance guarantee obligation of ART on behalf of RMDDx.

Income Tax Provision

The tax provisions for the three and six months ended June 30, 2015 and 2014 are attributable to the U.S. federal and state income taxes on our continuing operations. The Company’s combined federal and state effective income tax rate from continuing operations for both the three and six months ended June 30, 2015 and 2014 was 0% due to the expected utilization of deferred tax assets previously reserved for with a valuation allowance.

Income from Discontinued Operations

For the three months and six months ended June 30, 2015 , net income of $0 and $362,610 , respectively, net of tax, was recorded from discontinued operations as a result of the write-off of the remaining liabilities of $320,056 and the reversal of accumulated other comprehensive income of $42,502 from cumulative translation adjustments from RMDDx Corporation.

Earnings (Loss) Per Share

Consolidated basic and diluted earnings per share for the three months ended June 30, 2015 was $0.04 per share as compared to $0.09 per share for the same period in 2014 , a decrease of $0.05 per share. The decrease in earnings per share is due largely to the decrease in net sales of sensors in the three months ended June 30, 2015 versus the same period in 2014, partially offset by increased net sales in custom thermoplastic injection molding.

Consolidated basic and diluted earnings per share for the six months ended June 30, 2015 was $0.08 per share as compared to $0.18 per share for the same period in 2014 , a decrease of $0.10 per share. The decrease in earnings per share is due largely to the decrease in net sales of sensors and orthopedic implant components partially offset by the impact of other income from discontinued operations as a result of the final discharge order related to the bankruptcy of RMDDxUSA as well as the lack of net sales of Predictor licenses in the six months ended June 30, 2015 versus the same period in 2014.

Basic and diluted earnings per share from continuing operations for the three months ended June 30, 2015 was $0.04 per share compared to $0.09 per share for the three months ended June 30, 2014 , a decrease of $0.05 per share, due largely to the decrease in net sales of sensors, partially offset by increased net sales in custom thermoplastic injection molding.

Basic and diluted loss per share from continuing operations for the six months ended June 30, 2015 was $0.05 per share compared to earnings of $0.18 per share for the six months ended June 30, 2014 , a decrease of $0.23 per share, due largely to the decrease in net sales of sensors and orthopedic implant components as well as the lack of net sales of Predictor licenses.

Basic and diluted earnings per share from discontinued operations, for the three and six months ended June 30, 2015 was $0.00 per share and $0.13 per share, respectively as compared to $0.00 per share for the same periods in 2014 , due to the final discharge order related to the bankruptcy of RMDDxUSA issued in 2015.

Off-Balance Sheet Arrangements

In 2014, the Company entered into two operating leases for office equipment. Lease expense under all operating leases was approximately $1,822 and $3,644 for the three and six months ended June 30, 2015, respectively, and $0 for the same periods in 2014 .

Liquidity and Capital Resources

Working capital was $3,953,865 as of June 30, 2015 , as compared to $1,308,472 at December 31, 2014 , an increase of $2,645,393 . The increase is due primarily to the reclassification of the revolver from current liabilities to long-term liabilities, increases in accounts receivable and cash, partially offset by increased accounts payable and accrued expenses and other current liabilities.

Cash and cash equivalents were $284,774 and $209,398 at June 30, 2015 and December 31, 2014 , respectively, an increase of $75,376 . Substantially all of these funds are maintained in bank deposit accounts.

Trade accounts receivable were $4,357,896 and $3,536,747 at June 30, 2015 and December 31, 2014 , respectively, an increase of $821,149 due in part to the timing of, and the increase in, net sales in the month of June 2015 as compared to December 2014, as well as the timing of cash receipts.

Inventories were $2,490,723 at June 30, 2015 , as compared to $2,514,241 at December 31, 2014 , a decrease of $23,518 . Raw materials decreased $41,511 due to high usage levels during the second quarter of 2015 in custom thermoplastic injection molding. As an offset, work in progress increased $13,062 and finished goods increased $4,931 , due to larger shipments in the quarter ended June 30, 2015.

Accounts payable increased $325,282 due in part to purchases of raw material inventory driven by increased demand in custom thermoplastic injection molding.

Accrued expenses and other current liabilities increased $283,897 as compared to December 31, 2014 as discussed below in Operating Cash Flows.

Capital equipment expenditures were $784,157 for the six months ended June 30, 2015 , due to investments in machinery and equipment primarily for the contract manufacturing of orthopedic implant components as well as molding equipment.

I n March 2013, the Company entered into a multi-year credit facility with a Massachusetts bank. Under this credit facility the Company has a revolving line of credit (the "revolver"), a commercial term loan, two equipment term loans and an equipment line of credit. The bank facility contains both financial and non-financial covenants, all of which the Company is in compliance with as of June 30, 2015 .

The revolver provides for borrowings up to 80% of eligible accounts receivable and 50% of eligible raw materials inventory. The interest rate on the revolver is calculated at the bank's prime rate plus 0.25% ( 3.50% at June 30, 2015 ). The balance outstanding on the revolver was $2,391,495 as of June 30, 2015 . In June 2015, the revolver was extended for an additional two-year period maturing June 30, 2017.

The commercial term loan has a five year term with a maturity date in March 2018. The interest rate on the loan is a fixed 4.25% per annum, and requires monthly payments of approximately $28,000. At June 30, 2015 , the balance of the commercial term loan was $863,612 .

The original equipment line of credit allowed for advances of up to $1.0 million and included a one-year draw period during which payments were interest only. The draw period ended March 29, 2014 and the then outstanding balance on the equipment line of credit of $740,999 was converted to a five-year term loan with monthly payments of approximately $14,000 consisting of principal and interest at a fixed rate of 4.65% . The balance of the equipment term loan was $571,789 as of June 30, 2015 .

On June 26, 2014, the Company entered into an equipment line of credit that allowed for advances of up to $1.0 million and included a one-year draw period during which payments were interest only. The draw period ended June 26, 2015 and the then outstanding balance on the equipment line of credit of $415,785 was converted to an equipment term loan with a five-year term, maturing on of June 26, 2020. The equipment term loan requires monthly payments of approximately $8,000, consisting of principal and interest at a fixed rate of 4.67% beginning in July 2015.

on a relative fair value basis resulting in $416,950 allocated to the notes and $83,050 allocated to the warrants as part of Additional-Paid-in-Capital. The total discount on the notes is being recognized as non-cash interest expense over the term of the notes. For the six months ended June 30, 2015 and 2014 , the Company recorded $13,842 of non-cash interest expense related to the amortization of the discount. The unamortized discount which is net against the outstanding balance of the subordinated promissory notes is $40,706 at June 30, 2015 and $54,548 at December 31, 2014 .

The borrowing agreement, under the bank facility as described above, contains both financial and non-financial covenants. The financial covenants include maintaining certain debt coverage and leverage ratios. The non-financial covenants relate to various matters including notice prior to executing further borrowings and security interests, mergers or consolidations, acquisitions, guarantees, sales of assets other than in the normal course of business, leasing, changes in ownership and payment of dividends.

No dividends were declared or paid in the six months ended June 30, 2015 and 2014 .

The Company believes that cash flows from its operations, together with its existing working capital, the revolving line of credit and other resources, will be sufficient to fund operations at current levels and repay debt obligations over the next twelve months. The Company continues to develop opportunities within new and existing channels where the Company can maximize its return on investments in capital equipment, research and development, marketing and human resources.

Summary of Changes in Cash Position

As of June 30, 2015 , the Company had cash on hand of $284,774 . For the six months ended June 30, 2015 , net cash provided by operating activities was $322,045 . Net cash used in investing activities for the six months ended June 30, 2015 was $768,985 . Net cash provided by financing activities for the six months ended June 30, 2015 was $522,316 . All of the above were from continuing operations. The net cash flows for the six months ended June 30, 2015 are discussed in further detail below.

Operating Cash Flows

For the six months ended June 30, 2015 , net cash provided by operating activities was $322,045 , due partially to net income of $223,288 as well as an increase in accounts payable of $325,282 , due in part to purchases of raw material inventory driven by increased demand in custom thermoplastic injection molding.

Additionally, accrued expenses and other current liabilities increased $283,897 due in part to an increase of $109,650 for inventory received but not invoiced at June 30, 2015 as compared to December 31, 2014 . Additionally, accrued payroll, taxes and benefits increased by $119,020 due in part to a seven day accrual at June 30, 2015 as compared to a three day accrual at December 31, 2014 . In addition, current deferred revenue related to tooling increased by $64,790 as a result of previously deferred items becoming current. As on offset, non-current liabilities consisting of non-current deferred revenues related to total tooling decreased $249,619 .

These increases were partially offset by a decrease in other assets of $226,802 consisting of current and non-current deferred cost of goods sold related to tooling.

Cash provided by operating activities was also impacted by non-cash add-backs for depreciation and amortization of $730,013 .

These sources of cash were partially offset by an increase in trade accounts receivable of $824,149 due largely to timing of shipments at the end of the quarter. Additional uses of cash came from a decrease in inventory of $23,518 and cash used in deposits, prepaid expenses and other assets of $76,378 .

In addition, there was a non-cash adjustment for net income from discontinued operations of $362,610 .

Investing Cash Flows

For the six months ended June 30, 2015 , net cash used in investing activities was $768,985 . The net cash used was primarily for capital expenditures of $784,157 , largely for machinery and equipment, primarily for the contract manufacturing of orthopedic implant components as well as for molding equipment.

The capital expenditures were partially offset by $20,700 of proceeds from the sale of fixed assets.

Financing Cash Flows

For the six months ended June 30, 2015 , net cash provided by financing activities was $522,316 . Cash was provided by proceeds of $320,000 from the Company's revolver and proceeds from the equipment line of credit of $415,785 , offset by payments on term notes payable of $242,080 . Additionally, there were proceeds of $28,611 from the exercise of stock options.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not Applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our principal executive officer and principal financial officer (“the Certifying Officers”) have evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on such evaluation, our Certifying Officers have concluded the Company's disclosure controls and procedures, as of the end of the period covered by this report, were effective.

The effectiveness of a system of disclosure controls and procedures is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of internal controls, and fraud. Due to such inherent limitations, there can be no assurance that any system of disclosure controls and procedures will be successful in preventing all errors or fraud, or in making all material information known in a timely manner to the appropriate levels of management.

Changes in Internal Control over Financial Reporting

During the three months ended June 30, 2015 there have been no changes in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

Item 6. Exhibit Index



Exhibit Number	Description of Exhibit	Page
3.0	Certificate of Incorporation	(a)
3.1	Amended and Restated By-laws	(b)
3.2	Certificate of Amendment of Certificate of Incorporation	X-1
4.0	Form of Certificate evidencing shares of the Company's Common Stock	(a)
4.6*	2001 Stock Option Plan	(c)
4.10*	2010 Equity Incentive Plan	(d)
4.11	Form of Subordinated Note	(e)
4.12	Form of Subordination Agreement	(e)
4.13	Form of Warrant to Purchase Common Stock	(e)
10.5	First Amendment and Loan Modification dated as of March 11, 2013 between the Company and RBS Citizens, National Association and RBS Asset Finance, Inc.	(f)
10.51	Loan and Security Agreement between UniBank for Savings and Arrhythmia Research Technology, Inc. and Micron Products, Inc. dated March 29, 2013	(f)
10.52*	Agreement and Releases between Arrhythmia Research Technology, Inc. and Michael S. Gunter dated March 31, 2013	(f)
10.53*	Employment Agreement between Arrhythmia Research Technology, Inc. and Salvatore Emma, Jr. dated as of March 28, 2013	(f)
10.54*	Amendment No. 2 to Executive Employment Agreement between David A. Garrison and the Company dated as of June 7, 2013	(g)
10.55*	Amended and Restated Agreement and Release between the Company and David A. Garrison entered into on September 12, 2013	(h)
10.56*	Employment Agreement between the Company and Salvatore Emma, Jr. dated as of January 9, 2014	(i)
10.57*	Employment Agreement between the Company and Derek T. Welch dated as of January 9, 2014	(i)
10.58	Third Amendment to Loan and Security Agreement and Commercial Equipment Line of Credit Promissory Note dated June 26, 2014	(j)
10.59*	Employment Agreement between the Company and Salvatore Emma, Jr. dated as of January 20, 2015	(k)
10.60*	Employment Agreement between the Company and Derek T. Welch dated as of January 20, 2015	(k)
10.61	Fourth Amendment to Loan and Security Agreement and Commercial Equipment Line of Credit Promissory Note dated June 19, 2015	X-2
21.0	Subsidiaries	(l)
31.1	Certification of the CEO pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)	X-3
31.2	Certification of the CFO pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)	X-4
32.1	Certification of the CEO pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X-5
32.2	Certification of the CFO pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X-6
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

* Indicates a management contract or compensatory plan required to be filed as an exhibit.

(a) Incorporated by reference to the Company’s Registration Statement on Form S-18 as filed with the Commission in April 1988, Registration Statement No. 33-20945-FW.

(b) Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission on July 1, 2011.

(c) Incorporated by reference to the Company’s Annual Report on Form 10-KSB for fiscal year ended December 31, 2001 as filed with the Commission on March 29, 2002.

(d) Incorporated by reference to the Company’s Registration Statement on Form S-8 as filed with the Commission on May 6, 2010, Registration Statement No. 333-166600.

(e) Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission on December 23, 2013.

(f) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q as filed with the Commission on July 1, 2013.

(g) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q as filed with the Commission on October 8, 2013.

(h) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q as filed with the Commission on November 19, 2013.

(i) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q as filed with the Commission on May 9, 2014.

(j) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q as filed with the Commission on August 7, 2014.

(k) Incorporated by reference to the Company's Form 10-K for fiscal year ended December 31, 2014 as filed with the Commission on March 20, 2015.

(l) Incorporated by reference to the Company's Form 10-K for fiscal year ended December 31, 2010 as filed with the Commission on March 23, 2011.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	ARRHYTHMIA RESEARCH TECHNOLOGY, INC.
August 13, 2015	By: /s/ Salvatore Emma, Jr.
	Salvatore Emma, Jr.
	President and Chief Executive Officer
	(principal executive officer)
	By: /s/ Derek T. Welch
	Derek T. Welch
	Chief Financial Officer
	(principal financial and accounting officer)

Exhibit 3.2

CERTIFICATE OF AMENDMENT

CERTIFICATE OF INCORPORATION

ARRHYTHMIA RESEARCH TECHNOLOGY, INC.

Pursuant to Section 242 of the

General Corporation Law of the State of Delaware

Arrhythmia Research Technology, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware,

DOES HEREBY CERTIFY:

FIRST: That the Board of Directors of said corporation, at a meeting of its members duly called and held pursuant to the General Corporation Law of the State of Delaware, duly adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation.

RESOLVED, that the Certificate of Incorporation of Arrhythmia Research Technology, Inc. be amended by changing the FOURTH Article thereof so that, as amended said Article shall be and read in its entirety as follows:

“FOURTH: The number of shares of which the Corporation is authorized to have outstanding is 12,000,000 shares, consisting of 2,000,000 shares of Serial Preferred Stock, $.001 par value per share (hereinafter called “Serial Preferred Stock”) and 10,000,000 shares of Common Stock, $.01 par value per share (hereinafter called “Common Stock”).

The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.

(a) COMMON STOCK.

(i) General . The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights of the holders of Serial Preferred Stock of any series as may be designated by the Board of Directors upon any issuance of Serial Preferred Stock of any series.

(ii) Voting . The holders of the Common Stock shall have voting rights at all meetings of stockholders, each such holder being entitled to one vote for each share thereof held by such holder; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation (which, as used herein, shall mean the Certificate of Incorporation of the Corporation, as amended from time to time, including the terms of any certificate of designations of any series of Serial Preferred Stock) that relates solely to the terms of one or more outstanding series of Serial Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation. There shall be no cumulative voting.

The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware.

(iii) Dividends . Dividends may be declared and paid on the Common Stock from funds lawfully available therefor as and when determined by the Board of Directors and subject to any preferential dividend or other rights of any then outstanding Serial Preferred Stock.

(iv) Liquidation . Upon the dissolution or liquidation of the Corporation, whether voluntary or involuntary, holders of Common Stock will be entitled to receive all assets of the Corporation available for distribution to its stockholders, subject to any preferential or other rights of any then outstanding Serial Preferred Stock.

Exhibit 3.2

(b) SERIAL PREFERRED STOCK.

Serial Preferred Stock may be issued from time to time in one or more series, each of such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors of the Corporation as hereinafter provided. Any shares of Serial Preferred Stock which may be redeemed, purchased or acquired by the Corporation may be reissued except as otherwise provided by law.

Authority is hereby expressly granted to the Board of Directors from time to time to issue Serial Preferred Stock in one or more series, and in connection with the creation of any such series, by resolution or resolutions providing for the issuance of the shares thereof, to determine and fix the number of shares of such series and such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be stated and expressed in such resolutions, all to the full extent now or hereafter permitted by the General Corporation Law of the State of Delaware. Without limiting the generality of the foregoing, the resolutions providing for issuance of any series of Serial Preferred Stock may provide that such series shall be superior or rank equally or be junior to Serial Preferred Stock of any other series to the extent permitted by law.

The number of authorized shares of Serial Preferred Stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware.”

SECOND: That thereafter, pursuant to resolution of its Board of Directors, an annual meeting of the stockholders of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment.

THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Section 242 of the General Corporation Law of the State of Delaware.

FOURTH: That this Certificate of Amendment to the Certificate of Incorporation shall become effective upon the filing of the Certificate of Amendment with the Delaware Secretary of State, which will occur as soon as reasonably practicable after approval.

IN WITNESS WHEREOF, said Arrhythmia Research Technology, Inc. has caused this Certificate to be executed, acknowledged and filed by its President this 10 ^th day of July, 2015.

ARRHYTHMIA RESEARCH TECHNOLOGY, INC.

By: /s/ Salvatore Emma, Jr.

Salvatore Emma, Jr.

President and Chief Executive Officer

Exhibit 10.61

FOURTH AMENDMENT

LOAN AND SECURITY AGREEMENT

This Fourth Amendment to Loan and Security Agreement (“Fourth Amendment to Loan and Security Agreement”) is dated as of June 19, 2015 and is made by and among UniBank for Savings (together with its successors and assigns, the “Bank” or “Lender”), Arrhythmia Research Technology, Inc. , a corporation duly organized and validly existing under the laws of the State of Delaware (sometimes referred to herein as “Arrhythmia”) and Micron Products Inc. , a corporation duly organized and validly existing under the laws of the Commonwealth of Massachusetts (sometimes referred to herein as “Micron”).

RECITALS

A. The Bank extended a line of credit dated March 29, 2013 to the Borrowers as evidenced by the $4,000,000.00 Commercial Revolving Line of Credit Promissory Note made by the Borrowers in favor of the Bank, as amended by First Amendment to Commercial Revolving Line of Credit Promissory Note dated October 3, 2013 (as amended to date and as may be further amended from time to time, the “Line Note”).

B. The Bank extended a term loan dated March 29, 2013 to the Borrowers as evidenced by the $1,500,000.00 Commercial Term Promissory Note made by the Borrowers in favor of the Bank (as amended to date and as may be further amended from time to time, the “Term Note”).

C. The Bank extended an equipment line of credit dated March 29, 2013 to the Borrowers as evidenced by the $1,000,000.00 Commercial Equipment Line of Credit Promissory Note made by the Borrowers in favor of the Bank, as amended by First Amendment to Commercial Equipment Line of Credit Promissory Note dated April 10, 2014 (as amended to date and as may be further amended from time to time, the “Equipment Note”).

D. The Bank extended an equipment line of credit dated June 26, 2014 to the Borrowers as evidenced by the $1,000,000.00 Commercial Equipment Line of Credit Promissory Note made by the Borrowers in favor of the Bank (as amended to date and as may be further amended from time to time, the “2014 Equipment Note”).

E. Except where the context requires otherwise, all capitalized terms used herein shall have the meanings set forth in the Loan and Security Agreement between the Bank and the Borrowers dated as of March 29, 2013 (as amended to date and as may be further amended from time to time, the “Loan Agreement”).

F. The Borrowers have requested that the Bank:


(i)	Modify certain provisions in the Loan Agreement; and

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Exhibit 10.61


(ii)	Provide an extension to the Termination Date of the Line of Credit and Line Note to June 30, 2017; and


(iii)	Provide additional financial accommodations to the Borrowers in the form of a $1,000,000.00 Equipment Line of Credit Loan to the Borrowers.

Now therefore, in order to induce the Bank to enter into this Fourth Amendment to Loan and Security Agreement, the Fourth Modification Documents (as hereafter defined), to provide the additional financial accommodations to the Borrowers and for other valuable consideration, the receipt and sufficiency of which is acknowledged, the Borrowers jointly and severally make the following representations, warranties, covenants and agreements effective as of the date of this Fourth Amendment to Loan and Security Agreement:

1. Inducement Representations . The Borrowers hereby jointly and severally represent, warrant and covenant to the Bank that: (a) no Event of Default has occurred, and no event has occurred which with notice or lapse of time or both would constitute an Event of Default under any of the Loan Documents; (b) the Loan Documents, including this Fourth Amendment to Loan and Security Agreement and the other Fourth Modification Documents are the valid, binding and enforceable obligations of the Borrowers, as applicable; (c) the Borrowers have no defenses, setoffs, claims or counterclaims against the Bank with respect to any of the Loans and to the extent any such defenses, setoffs, claims or counterclaims exist, the Borrowers hereby waive and release the same; (d) the execution and delivery of this Fourth Amendment to Loan and Security Agreement and each of the other Fourth Modification Documents have been duly authorized by all necessary corporate action; (e) all of the representations and warranties of the Borrowers set forth in the Loan Agreement and the other Loan Documents, as amended hereby, are true, accurate and complete on and as of the date hereof; (f) the payment and performance of all Obligations of the Borrowers to the Bank (as defined in the Loan Agreement) are secured and shall continue to be secured in accordance with the terms of the Loan Agreement and all other Loan Documents which create or perfect security interests in favor of the Bank; and (g) all facts set forth in the Recital Section of this Fourth Amendment to Loan and Security Agreement are true, accurate, and complete.

2. Amendment to Definitions in Section 1 of the Loan Agreement .

(a) Section 1 of the Loan Agreement is hereby amended by adding thereto the following new definitions and, for terms already defined therein, amending and restating such definitions as set forth below:

2015 Equipment Line of Credit means the Borrowers’ Equipment Line of Credit Loan with the Bank referred to in Section 2 hereof, the indebtedness of which is evidenced by the 2015 Equipment Note.

2015 Equipment Note means the Commercial Equipment Line of Credit Promissory Note dated June 19, 2015 made by the Borrowers in favor of the Lender in the original face amount of $1,000,000.00 evidencing indebtedness for the 2015

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Exhibit 10.61

Equipment Line of Credit, as the same may be amended, modified, restated or replaced from time to time.

Agreement or Loan Agreement means the Loan and Security Agreement, as amended by the First Amendment to Loan and Security Agreement dated October 3, 2013, as further amended by the Second Amendment to Loan and Security Agreement dated April 10, 2014, as further amended by Third Amendment to Loan and Security Agreement dated June 26, 2014, as further amended by Fourth Amendment to Loan and Security Agreement dated June 19, 2015, as the same may be further amended from time to time. Any and all references to the Agreement or Loan Agreement shall include the First Amendment to Loan and Security Agreement, the Second Amendment to Loan and Security Agreement, the Third Amendment to Loan and Security Agreement and the Fourth Amendment to Loan and Security Agreement.

Fourth Amendment to Loan and Security Agreement means this Fourth Amendment to Loan and Security Agreement, which amends the Loan and Security Agreement between the Bank and the Borrowers dated as of March 29, 2013.

Fourth Modification Documents mean the following:


(i)	the Fourth Amendment to the Loan and Security Agreement;


(ii)	the Second Amendment to Line Note;


(iii)	the 2015 Equipment Note; and


(iv)	all other documents executed by the Borrowers listed on the Closing Agenda attached hereto as Schedule H.

Loan Documents - the definition thereof shall additionally include this Fourth Amendment to Loan and Security Agreement and the Fourth Modification Documents.

Loans mean:

(i) the Line of Credit evidenced by the Line Note;

(ii) the Term Loan evidenced by the Term Note;

(iii) the Equipment Line of Credit evidenced by the Equipment Note;

(iv) the 2014 Equipment Line of Credit evidenced by the 2014 Equipment Note;

(v) the 2015 Equipment Line of Credit evidenced by the 2015 Equipment Note; and

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Exhibit 10.61

(vi) any other loans made by the Bank to Arrhythmia or Micron or both at any time.

Second Amendment to Line Note means the Second Amendment to Commercial Revolving Line of Credit Promissory Note dated June 19, 2015, which amends the Commercial Revolving Line of Credit Promissory Note dated as of March 29, 2013. Any and all references to the Line Note shall include the First Amendment to Line Note and the Second Amendment to Line Note.

(b) All other existing definitions in the Loan Agreement are hereby ratified and confirmed as amended to date.

3. Amendment to Section 2.1 of the Loan Agreement . Existing Section 2.1 is hereby deleted and the following is hereby inserted in its stead:

“2.1 Line of Credit .

(a) Pursuant to this Agreement and the terms and conditions of the Line Note and upon satisfaction of the conditions precedent in Section 5 hereof, the Borrowers may borrow, repay and reborrow under the Line of Credit; provided, however, that (i) the aggregate amount of all advances and borrowings at any one time outstanding thereunder shall not exceed the face amount of the Line Note minus the amount of all Open Credits or such lesser amount provided for in the Availability Letter (such maximum permitted amount being referred to as the “Maximum Availability”); and (ii) any privilege of the Borrowers to request advances or to borrow under the Line of Credit shall terminate on June 30, 2017 (as such date may be extended by the Bank in writing from time to time, in the Bank’s sole and absolute discretion, the “Termination Date”) or at the Bank’s option, on the earlier occurrence of a Default or an Event of Default;

(b) All advances under the Line of Credit shall be evidenced by the Line Note, shall bear interest thereunder and all principal, interest and other amounts due thereunder shall be due and payable in full on the Termination Date;

(c) Borrower shall not request advances under the Line of Credit which would cause the Maximum Availability to be exceeded if the advance were made.

(d) The making of any advances by the Bank to the Borrowers under the Line of Credit in excess of the Maximum Availability is for the Borrowers’ benefit and does not in any way effect the unconditional obligation of the Borrowers to repay such advances under the terms of the Line Note and the other applicable Loan Documents. Without limiting any other rights available to the Bank under the Loan Documents, the Borrowers agree to pay to the Bank upon DEMAND (whether or not an Event of Default exists) the principal balance of the Line of

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Exhibit 10.61

Credit outstanding in excess of the Maximum Availability together with all accrued and unpaid interest owing on said excess amounts.”

4. New Section 2.3B . The following new Section 2.3B is inserted immediately following the end of Section 2.3A and immediately preceding Section 2.4:

“ 2.3B 2015 Equipment Line of Credit .

(a) Pursuant to this Agreement and the terms and conditions of the 2015 Equipment Note and upon satisfaction of the conditions precedent in Section 5 hereof, the Borrowers may borrow and repay (but not reborrow) under the 2015 Equipment Line of Credit; provided , however, that (i) the aggregate amount of all advances and borrowings at any one time outstanding thereunder shall not exceed the face amount of the 2015 Equipment Note minus the amount of all Open Credits (such maximum permitted amount being referred to as the “2015 Equipment Maximum Availability”); (ii) any privilege of the Borrowers to request advances or to borrow under the 2015 Equipment Line of Credit shall terminate on the earlier of: (A) June 19, 2016 or (B) the date upon which the amount of all advances under the 2015 Equipment Line of Credit are equal to the face amount of the 2015 Equipment Note (such date as it may be extended in writing from time to time, in the Bank’s sole discretion, being referred to herein as the “2015 Equipment Conversion Date”) or, at the Bank’s option, on the earlier occurrence of a Default or an Event of Default.

(b) All advances under the 2015 Equipment Line of Credit shall be evidenced by the 2015 Equipment Line Note, shall bear interest thereunder and all principal, interest and other amounts due thereunder shall be due and payable in full on the Maturity Date (as defined in the 2015 Equipment Note).

(c) Any advance under the 2015 Equipment Line of Credit shall not exceed eighty percent (80%) of the invoice amount of the equipment being purchased with the proceeds of the 2015 Equipment Line of Credit.

(d) Borrowers shall not request advances under the 2015 Equipment Line of Credit which would cause the 2015 Equipment Maximum Availability to be exceeded if the advance were made.

(e) The making of any advances by the Bank to the Borrowers under the 2015 Equipment Line of Credit in excess of the 2015 Equipment Maximum Availability is for the Borrowers’ benefit and does not in any way effect the unconditional obligation of the Borrowers to repay such advances under the terms of the 2015 Equipment Line Note and the other applicable Loan Documents. Without limiting any other rights available to the Bank under the Loan Documents, the Borrowers agree to pay to the Bank upon DEMAND (whether or not an Event of Default exists) the principal balance of the 2015 Equipment Line

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Exhibit 10.61

of Credit outstanding in excess of the 2015 Equipment Maximum Availability together with all accrued and unpaid interest owing on said excess amounts.”

5. Amendment to Section 5.1 of the Loan Agreement . Existing Section 5.1 of the Loan Agreement is hereby deleted and the following is inserted in its stead:

“5.1 Initial Advances . The initial advance under the Line of Credit, the single advance under the Term Loan, the initial advance under the Equipment Line of Credit, the initial advance under the 2014 Equipment Line of Credit and the initial advance under the 2015 Equipment Line of Credit shall be subject to the following conditions precedent (unless waived by the Bank in its sole discretion):

(a) Approval of Bank Counsel . All legal matters incident to the transactions hereby contemplated shall be satisfactory to counsel for the Bank.

(b) Proof of Action . The Bank shall have received such documents evidencing each Borrower’s power to execute and deliver this Agreement and the other Loan Documents and the Bank shall have received evidence of compliance with all conditions set forth in the Bank’s Commitment Letter to the Borrowers dated March 12, 2013 in a timely fashion, all satisfactory to the Bank and its counsel.

(c) The Note and Loan Documents . The Borrowers shall have delivered to the Bank the Notes, this Agreement, the other Loan Documents and such other documents as the Bank may request including without limitation all documents necessary to confirm, secure and perfect the Bank’s security interest in the Collateral in form and substance satisfactory to the Bank (the “Security Documents”) including without limitation the Landlord’s Consents and Waivers, the Financing Statements of the Borrowers, the Patent Security Agreements and Trademark Security Agreements.

(d) Opinion of Counsel . The Bank shall have received from counsel for the each of the Borrowers a written opinion, satisfactory in form and substance to the Bank and its counsel, including without limitation due authority and enforceability opinions for each Borrower.

(e) No Event of Default . No Event of Default has occurred, and no Default shall have occurred, the Maximum Availability under the Line of Credit and the Equipment Maximum Availability under the Equipment Line of Credit, as applicable, shall not be exceeded at the time of the advance request or the making of the advance.

(f) No Material Adverse Change . There shall have been no material adverse change in the assets, liabilities, financial condition or business of the

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Exhibit 10.61

Borrowers since the date of any financial statements delivered to the Bank before or after the date of this Agreement.

(g) Collateral Priority . The Bank shall have received evidence satisfactory to it that all Loan Documents perfecting the Bank’s security interest in Collateral have been duly recorded and filed and all other action necessary to perfect the Bank’s liens in the Collateral have been taken such that the Bank’s liens shall constitute first priority perfected liens in all Collateral, subject to no other liens or encumbrances unacceptable to the Bank, all to the Bank’s complete satisfaction.

(h) Evidence of Insurance . At or prior to Closing, the Borrowers shall deliver to the Bank an insurance binder or binders evidencing insurance coverage(s) as required in Section 6.3 hereof.

(i) Organizational Documents . The Bank shall have received from each Borrower and satisfactorily reviewed and approved certified copies of the organizational documents for each Borrower and all amendments thereto, together with the resolutions of the appropriate parties authorizing the execution and delivery of the Loan Documents, said organizational documents to be in form and substance satisfactory to the Bank and its counsel.

(j) Operating Accounts. Prior to Closing, the Borrowers shall establish its operating accounts with the Bank.

(k) Certificates . The Bank shall have received from the Borrowers and satisfactorily reviewed and approved Certificates of Legal Existence and Certificates of Good Standing issued by the Secretary of State for each jurisdiction in which each Borrower is registered to conduct its business, Certificates of Tax Good Standing issued by the Delaware Division of Revenue and the Massachusetts Department of Revenue and an accountant’s letter of tax good standing with respect to filing and payment of any and all taxes for the Borrowers.

(l) 2012 Financial Statements . The Bank shall have received and satisfactorily reviewed the 2012 financial statements of the Borrowers, said financial statements to be in form, scope and substance satisfactory to the Bank in its sole and absolute discretion.

(m) Other Conditions . There shall be compliance with all other conditions and provisions contained in this Agreement and the other Loan Documents as applicable pertaining to advances.”

6. Amendment to Section 5.2 of the Loan Agreement . Existing Section 5.2 of the Loan Agreement is hereby deleted and the following is inserted in its stead:

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Exhibit 10.61

“5.2 Subsequent Advances . Every subsequent advance under the Line of Credit, the Equipment Line of Credit, the 2014 Equipment Line of Credit and the 2015 Equipment Line of Credit will be made subject to the continued satisfaction of the conditions set forth in Sections 5.1 (a) through (m) inclusive above through the date of the applicable advance and to the following additional conditions precedent that:

(a) Representations and Warranties . The representations and warranties contained in Section 4 hereof and in each other Loan Document shall be true and correct. Any request for a borrowing shall be deemed a certification by each Borrower as to the truth and accuracy of the representations and warranties contained in Section 4 hereof and in each other Loan Document as of the date of such request.

(b) Termination Date; Conversion Date . As applicable, the Termination Date (as defined in the Line Note) of the Line of Credit has not been reached, the Conversion Date (as defined in the Equipment Note) of the Equipment Line of Credit has not been reached, the 2014 Equipment Conversion Date (as defined in the 2014 Equipment Note) has not been reached and the 2015 Equipment Conversion Date (as defined in the 2015 Equipment Note) has not been reached.”

7. Amendment to Section H of Schedule A to the Loan Agreement. Existing Section H of Schedule A to the Loan Agreement is hereby deleted and the following is inserted in its stead:

“H. Use of Loan Proceeds .

Proceeds of the Line of Credit are to be used to payoff and terminate the existing Line of Credit with Citizens Bank and other obligations to Citizens Bank, including but not limited to the letter of credit issued for the benefit of the Bank of Nova Scotia and to pay costs and expenses and costs associated with the Line of Credit, Term Loan and Equipment Loan with UniBank for Savings (including without limitation UniBank for Saving’s legal costs and expenses) and for working capital including without limitation those purposes and payees set forth in the Authorization to Disburse associated with the Line of Credit dated March 29, 2013 this day.

Proceeds of the Term Loan are to be used to pay off existing debt owing under existing equipment leases, to finance accounts payable and costs associated with the closure of the Borrower’s Wireless DX division, and to pay costs and expenses and costs associated with the Line of Credit, Term Loan and Equipment Loan with UniBank for Savings (including without limitation UniBank for Saving’s legal costs and expenses) and for working capital including without limitation those purposes and payees set forth in

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Exhibit 10.61

the Authorization to Disburse associated with the Term Loan dated March 29, 2013.

Proceeds of the Equipment Loan are to be used to purchase equipment and to pay costs and expenses and costs associated with the Line of Credit, Term Loan and Equipment Loan with UniBank for Savings (including without limitation UniBank for Saving’s legal costs and expenses) and for working capital including without limitation those purposes and payees set forth in the Authorization to Disburse associated with the Equipment Loan dated March 29, 2013.


4.	Proceeds of the 2014 Equipment Line of Credit are to be used to purchase new and used equipment and to pay expenses and costs associated with the 2014 Equipment Line of Credit with UniBank for Savings (including without limitation UniBank for Savings’ legal costs and expenses) all as more particularly set forth in the authorization to disburse dated June 26, 2014.”


5.	Proceeds of the 2015 Equipment Line of Credit are to be used to purchase new and used equipment and to pay expenses and costs associated with the 2015 Equipment Line of Credit with UniBank for Savings (including without limitation UniBank for Savings’ legal costs and expenses) all as more particularly set forth in the authorization to disburse dated June 19, 2015.”

8. New Schedule H . The following new Schedule H attached hereto is added to the Loan Agreement following the end of Schedule G.

9. Other Loan Document Amendments and Reaffirmation . The Line Note is being amended this date pursuant to the Second Amendment to Line Note dated of even date herewith.

10. No Waiver . The Borrowers hereby acknowledge that the Bank has made no waiver of any provision of the Loan Documents nor of any Default or Event of Default which may exist and that no such waiver shall be implied by virtue of this Fourth Amendment or otherwise.

11. Costs and Expenses . The Borrowers will pay to the Bank upon demand all costs and expenses (including attorney’s fees) reasonably incurred by the Lender in connection with the documentation and closing of the Fourth Modification Documents.

12. Conditions . The effectiveness of the Fourth Modification Documents shall be conditioned upon, at the Bank’s option: (a) the execution and delivery of this Fourth Amendment to Loan and Security Agreement and the other Fourth Modification Documents by all of the parties thereto; and (b) the receipt by Bank of all other documents and certificates reasonably requested by Bank and its counsel including without limitation, the Bring Down Certificate for each Borrower.

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Exhibit 10.61

13. Reaffirmation of Loan Documents . Except as expressly modified herein all other terms and conditions of the Loan Documents are hereby ratified and confirmed and the Loan Documents, as modified hereby, are and continue to be in full force and effect. All references in the Loan Documents to any Loan Document shall mean that Loan Document, as amended to date and as further amended from time to time.

14. Reaffirmation of Cross-Collateralization and Cross-Default. The Borrowers hereby acknowledge that the obligations of the Borrowers set forth in the Loan and Security Agreement and the other Loan Documents are intended to capture all obligations and debts of the Borrowers owing to the Bank. This includes any agreements, loan agreements, security agreements, mortgages, letters or credit, and any other existing or future loans. The Borrowers acknowledge that all obligations of the Borrowers owing to the Bank are cross-collateralized and cross-defaulted with all obligations outstanding.

[This space intentionally left blank; signature page to follow.]

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Exhibit 10.61

IN WITNESS WHEREOF the parties have executed this instrument under seal as of the 19 ^th day of June, 2015.

Borrowers:

Arrhythmia Research Technology, Inc.

_____________________________ By: /s/ Salvatore Emma, Jr.


Witness	Salvatore Emma, Jr., President and

Chief Executive Officer

Duly Authorized

Micron Products Inc.

_____________________________ By: /s/ Salvatore Emma, Jr.


Witness	Salvatore Emma, Jr., President and

Chief Executive Officer

Duly Authorized

Bank:

UniBank for Savings

_____________________________ By: /s/ John Decker


Witness	John Decker, Vice President

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Exhibit 10.61

SCHEDULE H

FOURTH MODIFICATION TO FINANCING ARRANGEMENTS

ARRHYTHMIA RESEARCH TECHNOLOGY, INC. AND

MICRON PRODUCTS INC.

MADE BY

UNIBANK FOR SAVINGS

CLOSING DATE: June 19, 2015



Lender: John Decker, Vice President UniBank for Savings 24 Gold Star Boulevard Worcester, MA 01605 Phone: (508) 849-4253 Fax: (508) 234-7603 Email: John.Decker@unibank.com	Borrowers: Arrhythmia Research Technology, Inc. Micron Products Inc. Guarantors: None
Lender’s Counsel: Anthony J. Salvidio, II, Esquire Fletcher Tilton, PC (“FT”) 370 Main Street, 11 ^th Floor Worcester, MA 01608 Phone: (508) 459-8004 Fax: (508) 459-8304 Email: asalvidio@fletchertilton.com Karen M. LaFond, Esquire Phone: (508) 459-8015 Fax: (508) 459-8315 Email: klafond@fletchertilton.com	Borrowers’ Counsel: Paul J. D’Onfro, Esquire Mirick O’Connell DeMaille & Lougee LLP (“MODL”) 100 Front Street Worcester, MA 01608 Phone: (508) 929-1624 Fax: (508) 983-6249 Email: pdonfro@mirickoconnell.com
DOCUMENTS		RESPONSIBLE PARTY

Fourth Modification to Financing Arrangements

1. Fourth Amendment to Loan and Security Agreement		FT
2. Second Amendment to Commercial Revolving Line of Credit Promissory		FT
3. $1,000,000.00 Equipment Line of Credit Promissory Note		FT
4. Disbursement Authorization - $1,000,000.00 Equipment Line of Credit Promissory Note		FT

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Exhibit 10.61



Lender: John Decker, Vice President UniBank for Savings 24 Gold Star Boulevard Worcester, MA 01605 Phone: (508) 849-4253 Fax: (508) 234-7603 Email: John.Decker@unibank.com	Borrowers: Arrhythmia Research Technology, Inc. Micron Products Inc. Guarantors: None
5. Copy of existing and continuing UCC-1 Financing Statements a) Arrhythmia Research Technology, Inc. (Delaware) All Asset b) Arrhythmia Research Technology, Inc. (Delaware) Specific Equipment c) Micron Products Inc. (Massachusetts) All Asset d) Micron Products, Inc. (Massachusetts) Specific Equipment		FT
6. UCC-1 Specific Equipment Financing Statements of Arrhythmia Research Technology, Inc. filed with: a) Delaware Secretary of State b) Worcester North District Registry of Deeds c) Any and all other applicable filing/recording offices where specific equipment is possessed		FT (to come upon purchase of each unit of specific equipment)
7. UCC-1 Specific Equipment Financing Statements of Micron Products Inc. filed with: a) Massachusetts Secretary of the Commonwealth b) Worcester North District Registry of Deeds c) Any and all other applicable filing/recording offices where specific equipment is possessed		FT (to come upon purchase of each unit of specific equipment)
8. Evidence of Hazard and Liability Insurance coverage listing Lender as Loss Payee and Additional Insured as applicable a) Arrhythmia Research Technology, Inc. b) Micron Products Inc.		In Lender’s Files
9. Certificates of Good Standing a) Arrhythmia Research Technology, Inc. b) Micron Products Inc.		MODL
10. Bring Down Certificates a) Arrhythmia Research Technology, Inc. b) Micron Products Inc.		FT
11. Opinion of Counsel to Borrowers re: Authorization, Due Authority, Enforceability		MODL
12. Identification		In Lender’s Files

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Exhibit 10.61

COMMERCIAL EQUIPMENT LINE OF CREDIT

PROMISSORY NOTE

$1,000,000.00 Worcester, Massachusetts

June 19, 2015

FOR VALUE RECEIVED Arrhythmia Research Technology, Inc. , a corporation duly organized and validly existing under the laws of the State of Delaware having a principal place of business at 25 Sawyer Passway, Fitchburg, Massachusetts 01420 and Micron Products Inc. , a corporation duly organized and validly existing under the laws of the Commonwealth of Massachusetts having a principal place of business at 25 Sawyer Passway, Fitchburg, Massachusetts 01420 (each and collectively, the “Borrower”) jointly and severally promise to pay to the order of UniBank for Savings (with its successors, assigns and any future holder or holders of this Note being the “Lender”) at its offices at 49 Church Street, Whitinsville, Massachusetts 01588 or at such other place as the Lender may from time to time designate in writing, the principal sum of One Million and 00/100 Dollars ($1,000,000.00) , or the aggregate unpaid principal amount of all advances made by the Lender to the Borrower under terms hereinafter set forth, whichever is less, in lawful money of the United States, to pay interest on each advance at a variable per annum rate equal to the Interest Rate (as hereafter defined), unless the Default Rate is in effect in which event the Interest Rate shall be the Default Rate. All advances shall be due and payable as set forth herein, but if not sooner paid, this Note and all amounts due hereunder shall be due and payable on June 19, 2021 (said date as the same may be extended from time to time in the Lender’s discretion, being the “Maturity Date”), without notice or demand.

This Note evidences the Borrower’s indebtedness under the $1,000,000 Equipment Line of Credit made by the Bank to the Borrower of even date herewith as defined in the Loan and Security Agreement among the Borrower and the Bank dated March 29, 2013 (as the same may be amended or modified from time to time, the “Loan Agreement”), incorporated herein by reference (the “2015 Equipment Line of Credit”).

Subject to the terms and conditions set forth herein and in the Loan Agreement, the Borrower may request advances and borrow funds under the 2015 Equipment Line of Credit during the period from the date hereof until the earlier of: (i) June 19, 2016 or (ii) the date upon which the amount of all advances under this Note are equal to the face amount of this Note (such date as it may be extended in writing from time to time, in the Bank’s sole discretion, being referred to herein as the “2015 Equipment Conversion Date”). The Borrower’s privilege to

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Exhibit 10.61

request advances and borrow funds under the 2015 Equipment Line of Credit shall terminate on the 2015 Equipment Conversion Date or, at the Bank’s option, an earlier Default or Event of Default. The aggregate amount of all advances advanced under the 2015 Equipment Line of Credit shall not exceed $1,000,000.00. Advances which are repaid may not be reborrowed. Should the amount of said advances at any time exceed the maximum amount permitted herein, the Borrower shall be obligated to immediately pay to the Bank the amount of such excess together with accrued and unpaid interest.

Interest on the outstanding principal of all advances hereunder shall be due and payable commencing one month from the date hereof and continuing monthly thereafter on the same day or last day, whichever shall first occur, of each succeeding month (each a “Payment Date”) until the 2015 Equipment Conversion Date.

Commencing with the first Payment Date after the 2015 Equipment Conversion Date, principal and interest shall be due and payable in consecutive monthly installments the number of which shall be equal to the number of months remaining between the 2015 Equipment Conversion Date and the Maturity Date and of which all but the last (the “Final Payment”) shall be in such amount as is necessary to amortize the outstanding principal balance of this Note with interest thereon at the rate applicable from time to time hereunder based upon an assumed direct reduction amortization schedule equal to six (6) years from the date of this Note. Each such monthly installment of principal and interest shall be subject to adjustment by the Lender from time to time in order to insure that payments are sufficient to properly amortize the then outstanding principal balance of this Note with interest thereon based upon the applicable assumed amortization schedule and changes in the rate of interest applicable from time to time to the principal balance of this Note. The Lender may adjust any monthly installment upon written notice to the Borrower if a failure to so adjust would result in less than the total amount of all accrued interest due being paid on any Payment Date (as hereafter defined).

The first of said consecutive monthly payments of principal and interest shall be due and payable on the first Payment Date after the 2015 Equipment Conversion Date and the remainder of said monthly payments shall be due on the same day or last day, whichever shall first occur, of each succeeding month thereafter (each a “Payment Date”). The Final Payment shall be in an amount equal to the then outstanding principal balance of this Note plus all accrued and unpaid interest and all other amounts owing hereunder. The Final Payment, unless sooner paid, shall be due and payable on the Maturity Date, without notice or demand.

This Note has been executed and delivered subject to the following additional terms and conditions:

1. Definitions . For purposes of this Note, the following terms shall have the following meanings:

1.1 “Banking Day” means any day other than a Saturday or Sunday, or other day on which commercial banks in the Commonwealth of Massachusetts are authorized or required to close under the laws of the Commonwealth of Massachusetts.

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Exhibit 10.61

1.2 “Base Rate” means the Federal Home Loan Bank of Boston Five Year Rate of interest, as disclosed on the rate sheet provided to Lender. In the event that such rate of interest currently referred to shall no longer exist or no longer be referred to as the “Federal Home Loan Bank of Boston Five Year Rate” or “Federal Home Loan Bank of Boston Rate”, or in the event the Lender or a future holder of the Note shall no longer use the Federal Home Loan Bank of Boston Five Year Rate as its reference rate of interest, then the term “Base Rate” shall be deemed to refer to the comparable reference rate of interest adopted or used in lieu thereof by the Lender or any such future holder, which represents a reasonable substitute in the form of Standards Rates used in the market at that time such as the Treasury Rates or other indexes, whether such rate be referred as to the “Base Rate” or otherwise.

1.3 “Default” means the occurrence of an Event of Default or the occurrence of any event, which with the giving of notice or the passage of time, or both would constitute an Event of Default.

1.4 “Event of Default” has the meaning given to it in Section 11 hereof and the Loan Agreement and includes but is not limited to a failure by the Borrower to comply with any term or condition of this Note or any other Loan Document.

1.5 “Governing State” means the Commonwealth of Massachusetts.

1.6 “Interest Rate” shall have the meaning given to it in Section 2 hereof, unless the Default Rate is in effect, in which event the Interest Rate shall be the Default Rate.

1.7 “Loan Agreement” means the Loan and Security Agreement between the Lender and the Borrower dated March 29, 2013, as the same may be amended from time to time.

1.8 “Loan Documents” has the meaning given to it in the Loan Agreement and includes without limitation this Note and any and all agreements, instruments, documents, security agreements, mortgages, financing statements, and supplements thereto and relating to the loan evidenced by this Note (the “Loan”), or entered into between the Borrower or any one of them in favor of, or with, the Lender, at any time, for any purpose, all as amended, renewed or extended from time to time.

1.9 “Obligations” mean all liabilities, indebtedness, obligations, advances, covenants and loans now or hereafter due or owing by or from any Borrower (including without limitation any obligation as a guarantor) to the Lender of whatever kind, description or nature, whether or not evidenced by any note or other instrument, whether or not for the payment of money, whether or not currently contemplated at the time of this Agreement, whether now existing, or hereafter arising or created, whether such obligations be direct or indirect, absolute or contingent, primary or secondary, secured or unsecured, or due or to become due, including, without limitation, all liabilities and obligations under the Notes and other Loan Documents, and all indemnity and

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Exhibit 10.61

reimbursement obligations of any Borrower, actual or contingent, in respect of letters of credit or banker’s acceptances issued by the Lender for the account of or guaranteed by any Borrower, all obligations of any partnership of joint venture as to which any Borrower is or may become liable and any so called SWAP contracts entered into by or given by any Borrower to the Lender, regardless of how they arise or by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, any and all obligations arising under any foreign exchange contracts, interest rate cap, floor or hedging agreements, or similar agreements, all obligations of any Borrower to the Lender arising out of or in connection with any Automated Clearing House (“ACH”) Agreements relating to the processing of ACH transactions, all obligations of any Borrower to the Lender to repay overdrafts whether or not such obligations are related to the transactions described in the Notes and other Loan Documents, and includes obligations to perform acts and refrain from taking action as well as obligations to pay money. The term “Obligations” shall also include without limitation all accrued interest and all costs and expenses, including attorney’s fees, costs and expenses relating to the appraisal and/or valuation of assets and all costs and expenses incurred or paid by the Lender in exercising, preserving, defending, collecting, administering, enforcing or protecting any of its rights under the Obligations or hereunder or with respect to the Collateral or in any litigation arising out of the transactions evidenced by the Obligations. The term “Obligations” shall be construed in its broadest and most comprehensive sense.

1.11 “Open Credits” mean the face amount of all letters of credit or bankers acceptances issued by the Lender for the account of any Borrower or guaranteed by any Borrower.

1.12 “Prime Rate” means the highest per annum rate of interest published by the Wall Street Journal from time to time as the Prime Rate. In the event that the reference rate of interest currently referred to in the Wall Street Journal as the “Prime Rate” shall no longer exist or no longer referred to as the “Prime Rate”, or in the event the Lender or a future holder of the Note shall no longer use the Wall Street Journal published Prime Rate as its reference rate of interest, then such term shall be deemed to refer to the comparable fluctuating reference rate of interest adopted or used in lieu thereof by the Lender or any such future holder, whether such rate be referred as to the “prime rate”, “base rate” or otherwise.

2. Interest Rate . Except as hereinafter provided, the outstanding principal balance of this Note shall bear interest at a fluctuating per annum rate of interest equal to the Prime Rate plus one quarter of one percent (0.25%) until the 2015 Equipment Conversion Date. On the 2015 Equipment Conversion Date, the per annum rate of interest shall be automatically adjusted to a fixed per annum rate equal to the greater of: (i) the Base Rate as at the 2015 Equipment Conversion Date plus three percentage points (3.00) or (ii) four and one quarter of one percent (4.25%), at which time the interest rate shall be fixed until the Maturity Date. Changes in the rate of interest resulting from changes in the Prime Rate shall take place immediately without notice or demand of any kind. For all purposes of this Note, the Lender’s written notice or

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Exhibit 10.61

statement to the Borrower of the applicable rate of interest shall be conclusive and binding absent manifest error.

3. Advances, Notice Of Borrowing .

3.1 When the Borrower desires to borrow hereunder, it shall give the Lender notice specifying the date of the proposed borrowing (which shall be a Banking Day) and the amount to be borrowed. If any advance is made, the Lender shall record on the books and records of the Lender an appropriate notation evidencing such advance, each repayment on account of the principal thereof and the amount of interest paid; and the Borrower authorizes the Lender to maintain such records or make such notations and agrees that the amount shown on the books and records as outstanding from time to time shall constitute the amount owing to the Lender pursuant to this Note, absent manifest error. Amounts borrowed under this Note may not be reborrowed. Unless a Default or an Event of Default occurs, the Borrower may borrow and repay under this Note; provided, however, that: (i) each request by the Borrower for an advance hereunder shall be accompanied by an invoice evidencing the price and specifications of the equipment being purchased; (ii) at no time shall the outstanding principal balance of this Note exceed an amount equal to the face amount of this Note minus the aggregate amount of all Open Credits (the “2015 Equipment Maximum Availability”); (iii) at no time shall advances be requested which would cause the outstanding principal balance of this Note to exceed the 2015 Equipment Maximum Availability; (iv) all outstanding principal plus accrued and unpaid interest shall be paid in full on the Maturity Date; and (v) any privilege to request advances hereunder shall terminate on the 2015 Equipment Conversion Date.

3.2 [Intentionally omitted].

3.3 Any advance hereunder shall not exceed eighty percent (80%) of the invoice amount of the equipment being purchased with the proceeds of the 2015 Equipment Line of Credit.

3.4 The making of any advances by the Lender to the Borrower under the 2015 Equipment Line of Credit in excess of the 2015 Equipment Maximum Availability is for the Borrower’s benefit and does not in any way effect the unconditional obligation of the Borrower to repay such advances under the terms of this Note and the other applicable Loan Documents. Without limiting any other rights available to the Lender under the Loan Documents, the Borrower agrees to pay to the Lender upon DEMAND (whether or not an Event of Default exists) the principal balance of the 2015 Equipment Line of Credit outstanding in excess of the 2015 Equipment Maximum Availability together with all accrued and unpaid interest.

4. Interest Rate/Payments .

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Exhibit 10.61

4.1. Interest Rate, Payment of Interest . So long as no Event of Default has occurred and subject to the terms hereof, each advance hereunder shall bear interest at the interest rate called for and calculated pursuant to the terms of this Note.

4.2. Accounts; Records. The Lender is authorized (but not required) to charge principal and interest and all other amounts due under this Note to any account of any Borrower with the Lender when and as it becomes due. All advances made by the Lender to the Borrower shall be evidenced by an appropriate notation on the books and records of the Lender, which records shall reflect each repayment on account of the principal thereof, and the amount of interest paid; and the Borrower authorizes the Lender to maintain such records or make such notations and agrees that the amount shown on the books and records of the Lender, as outstanding from time to time shall constitute the amount owing to the Lender pursuant to this Note, absent manifest error; provided, however, that the failure by the Lender to make any such notation with respect to any advance or payment shall not limit or otherwise affect the obligations of the Borrower hereunder.

4.3 Additional Payments . If the Lender in its reasonable judgment determines that the effect of an applicable law or government regulation, guideline or order or the interpretation thereof by any governmental authority charged with the administration thereof (such as, for example, a change in official reserve requirements which the Lender is required to maintain in respect of loans or deposits or other funds procured for funding such loans) is to increase the cost to the Lender of making or continuing a Loan hereunder or to reduce the amount of any payment of principal or interest receivable by the Lender thereon, then the Borrower shall pay to the Lender on demand such additional amounts as the Lender may determine in its sole and absolute discretion, to be required to compensate the Lender for such additional costs or reduction. Any additional payment under this section will be computed from the effective date at which such additional costs have to be borne by the Lender. A certificate as to any additional amounts payable pursuant to this section setting forth the basis and method of determining such amounts shall be conclusive, absent manifest error, as to the determination by the Lender set forth therein if made reasonably and in good faith. The Borrower shall pay any and all amounts so certified to it by the Lender within ten (10) days of receipt of such certificate.

5. 360 Day Year / Default Rate . All computations of interest under this Note shall be made on the basis of a three hundred sixty (360) day year and the actual number of days elapsed. To the extent allowed by applicable law, after the occurrence of any Event of Default, after the Maturity Date or after judgment has been rendered on this Note, all outstanding principal and unpaid interest shall bear, until paid, interest at a rate per annum equal to four (4.000) percentage points greater than the Interest Rate called for and calculated pursuant to the terms of this Note (the “Default Rate”).

6. Late Charge . If a regularly scheduled payment is fifteen (15) days or more late, Borrower will be charged five percent (5.000%) of the unpaid portion of the regularly scheduled payment or twenty five dollars ($25.00), whichever is greater. If the Lender demands payment of

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Exhibit 10.61

the Loan and the Borrower does not pay the Loan within fifteen (15) days after the Lender’s demand, the Borrower will be charged either five percent (5.000%) of the unpaid principal plus accrued unpaid interest or twenty five dollars ($25.00), whichever is greater.

7. Expenses . The Borrower further promises to pay to the Lender, as incurred, and as an additional part of the unpaid principal balance, all costs, expenses and reasonable attorneys’ fees (which may include, without limitation, the allocable cost of the Lender’s internal legal counsel) incurred: (a) in the protection, modification, collection, defense or enforcement of all or part of this Note or any guaranty hereof or any other Loan Document; (b) in the foreclosure or enforcement of any mortgage or security interest which may now or hereafter secure either the debt hereunder or any guaranty thereof; (c) with respect to any action taken to protect, defend, modify or sustain the lien of any such mortgage or security agreement; (d) with respect to any litigation or controversy arising from or connected with this Note or any mortgage or security agreement or collateral which may now or hereafter secure this Note; or (e) with respect to any act to protect defend, modify, enforce or release any of its rights or remedies with regard to, or otherwise effect collection of, any collateral which may now or in the future secure this Note or with regard to or against the Borrower or any endorser, guarantor or surety of this Note.

8. Prepayment . The Borrower may prepay this Note in whole or in part, at any time, without penalty or premium.

9. Mandatory Prepayment / Application of Payments .

9.1. The Borrower shall be required to prepay ON DEMAND all advances made under this Note to the extent the aggregate of all such advances exceeds the amounts permitted hereunder. In addition the Borrower shall pay, if applicable, charges incurred pursuant to the terms hereof.

9.2. All payments, including any prepayments shall, at the option of the Lender, be applied first to interest on the unpaid principal of all advances due under this Note, and then to the payment of all fees, costs, and expenses incurred by the Lender or owing to the Lender by the Borrower arising out of the loan transaction evidenced by this Note which have not been paid or reimbursed to the Lender, and then to the balance on account of the principal due under this Note.

Prepayments of principal (whether voluntary or involuntary) shall be applied to unpaid principal installments under this Note in inverse order of their maturity and shall not affect the obligation to pay regular installments due hereunder until the entire indebtedness is paid in full.

10. Loan Agreement . This Note has been executed and delivered in accordance with the Loan Agreement which sets forth further terms and conditions upon which the entire unpaid principal hereof and all interest hereon may become due and payable prior to the Maturity Date, and generally as to further rights of the Lender and duties of the Borrower with respect hereto. Capitalized terms not defined herein which are defined terms in the Loan Agreement shall have

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Exhibit 10.61

the meanings set forth therein. No reference to the Loan Agreement or other Loan Documents or to any provision thereof shall affect or impair the absolute and unconditional obligation of the Borrower to pay principal or interest or other amounts owing under this Note.

11. Default .

11.1. The happening of any of the following events or conditions shall constitute an “Event of Default” under this Note:

11.1.1. Failure to make any payment of principal or interest or any sum due under this Note or any other promissory note or instrument made by the Borrower or any one or more of them in favor of the Lender; or

11.1.2. Failure by any Borrower to observe or perform any covenant contained herein; or

11.1.3 A default or the occurrence of an event of default in any other Loan Document including, without limitation, an Event of Default as defined in the Loan Agreement.

11.2. Upon and after the occurrence of a Default or an Event of Default, the availability of advances hereunder shall, at the option of the Lender, be deemed to be automatically terminated. Upon and after an Event of Default, at the option of the Lender, the whole of the indebtedness evidenced by this Note, including principal and interest, and all other amounts which may be or become due or owing by the Borrower to the Lender shall, at the option of the Lender, immediately become due and payable without presentment, demand, protest, notice of protest, or other notice of dishonor of any kind, all of which are hereby expressly waived by the Borrower.

12. Waivers, Consent to Jurisdiction . Each Borrower agrees that no delay or failure on the part of the Lender in exercising any power, privilege, remedy, option or right hereunder shall operate as a waiver thereof or of any other power, privilege, remedy or right; nor shall any single or partial exercise of any power, privilege, remedy, option or right hereunder preclude any other or future exercise thereof or the exercise of any other power, privilege, remedy, option or right. The rights and remedies expressed herein are cumulative, and may be enforced successively, alternately, or concurrently and are not exclusive of any rights or remedies which holder may or would otherwise have under the provisions of all applicable laws, and under the provisions of all agreements between the Borrower and the Lender.

Each Borrower hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note. Each Borrower hereby assents to any extension or postponement of the time of payment or any other indulgence, to the addition or release of any party or person

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Exhibit 10.61

primarily or secondarily liable, and to the addition, release and/or substitution of all or any portion of any collateral now or hereafter securing this Note.

Each Borrower hereby waives such rights as it may have to notice and/or hearing under any applicable federal or state laws pertaining to the exercise by Lender of such rights as the Lender may have regarding the right to seek prejudgment remedies and/or deprive Borrower of or affect the use of or possession or enjoyment of Borrower’s property prior to the rendition of a final judgment against the Borrower. Each Borrower further waives any right it may have to require Lender to provide a bond or other security as a precondition to or in connection with any prejudgment remedy sought by Lender, and waives any objection to the issuance of such prejudgment remedy based on any offsets, claims, defenses or counterclaims to any action brought by the Lender.

EACH BORROWER AND LENDER MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN AND ACCEPT THIS NOTE.

Each Borrower hereby agrees that the following courts: State Court - Any state or local court of the Governing State; Federal Court - United States District Court for the District of the Governing State; or at the option of Lender, any court in which Lender shall initiate legal or equitable proceedings and which has subject matter jurisdiction over the matter in controversy, shall have exclusive jurisdiction to hear and determine any claims or disputes between Borrower and Lender pertaining directly or indirectly to this Note or to any matter arising in connection with this Note. Each Borrower expressly submits and consents in advance to such jurisdiction in any action or proceeding commenced in such courts, hereby waiving personal service of the summons and complaint, or other process or papers issued therein, and agreeing that service of such summons and complaint, or other process or papers, may be made by registered or certified mail addressed to Borrower at the address set forth herein. Should Borrower fail to appear or answer any summons, complaint, process or papers so served within thirty (30) days after the mailing thereof, it shall be deemed in default and an order and/or judgment may be entered against it as demanded or prayed for in such summons, complaint, process or papers. The exclusive choice of forum set forth herein shall not be deemed to preclude the enforcement of any judgment obtained in such forum or the taking of any action under this Note to enforce the same in any appropriate jurisdiction.

This Note shall be governed by and construed in accordance with the laws of the Governing State.

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Exhibit 10.61

13. Maximum Permissible Interest Rate . The Borrower shall not be obligated to pay and the Lender shall not collect interest at a rate higher than the maximum permitted by law or the maximum that will not subject the Lender to any civil or criminal penalties. If, because of the acceleration of maturity the payment of interest in advance or any other reason, the Borrower is required, under the provisions of any Loan Document or otherwise, to pay interest at a rate in excess of such maximum rate, the rate of interest under such provisions shall immediately and automatically be reduced to such maximum rate and any payment made in excess of such maximum rate, together with interest thereon at the rate provided herein from the date of such payment, shall be immediately and automatically applied to the reduction of the unpaid principal balance of this Note as of the date on which such excess payment was made. If the amount to be so applied to reduction of the unpaid principal balance exceeds the unpaid principal balance, the amount of such excess shall be refunded by the Lender to the Borrower.

14. Replacement Documents . Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other security document(s) which is not of public record and, in the case of any such loss, theft, destruction or mutilation, upon surrender and cancellation of such Note or other document(s), the Borrower will issue, in lieu thereof, a replacement Note or other document(s) in the same principal amount thereof and otherwise of like tenor.

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Exhibit 10.61

15. Transfer and Assignment .

15.1. The Lender may at any time pledge, endorse, assign, or transfer all or any portion of its rights under the Loan Documents including any portion of this Note to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act. 12 U.S.C. Section 341. No such pledge or enforcement thereof shall release the Lender from its obligations under any of the Loan Documents.

15.2. The Lender shall have the unrestricted right at any time or from time to time, and without any Borrower’s consent, to sell, assign, endorse, or transfer all or any portion of its rights and obligations hereunder to one or more lenders or other entities (each an “Assignee”), and each Borrower agrees that it shall execute, or cause to be executed such documents including without limitation, amendments to this Note and to any other documents, instruments, and agreements executed in connection herewith as the Lender shall deem necessary to effect the foregoing. In addition, at the request of the Lender or any such Assignee, the Borrower shall issue one or more new promissory notes, as applicable, to any such Assignee and, if the Lender has retained any of its rights and obligations hereunder following such assignment, to the Lender, which new promissory notes shall be issued in replacement of, but not in discharge of, the liability evidenced by the note held by the Lender prior to such assignment and shall reflect the amount of the respective commitments and loans held by such Assignee and the Lender after giving effect to such assignment. Upon the execution and delivery of appropriate assignment documentation, amendments, and any other documentation required by the Lender in connection with such assignment, and the payment by such Assignee of the purchase price agreed to by Lender and such Assignee, such Assignee shall be a party to this Note and shall have all of the rights and obligations of the Lender hereunder (and under any and all other guaranties, documents, instruments and agreements executed in connection herewith) to the extent that such rights and obligations have been assigned by the Lender pursuant to the assignment documentation between the Lender and such Assignee, and the Lender shall be released from its obligation hereunder and thereunder to a corresponding extent.

15.3. The Lender shall have the unrestricted right at any time and from time to time, and without the consent of or notice to the Borrower to grant to one or more institutions or other persons (each a “Participant”) participating interests in the Lender’s obligations to lend hereunder and/or any or all of the loans held by the Lender hereunder. In the event of any such grant by the Lender of a participating interest to a Participant, whether or not upon notice to the Borrower, the Lender shall remain responsible for the performance of its obligations hereunder and the Borrower shall continue to deal solely and directly with the Lender in connection with Lender’s rights and obligations hereunder. The Lender shall furnish any information concerning the Borrower in its possession from time to time to any prospective assignees and Participants, provided that the Lender shall require any such prospective assignee or Participant to maintain the confidentiality of such information.

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Exhibit 10.61

16. Setoff . Each Borrower hereby grants to the Lender a lien, security interest, and a right of setoff as security for all of the Obligations, upon and against all deposits, credits, collateral, and property of any Borrower, now or hereafter in the possession, custody, safekeeping, or control of the Lender or any entity under the control of the Lender, or in transit to any of them. At any time, without demand or notice, the Lender may set off the same or any part thereof and apply the same to any liability or obligation of the Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE THE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS, OR OTHER PROPERTY OF EACH BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVED. The Lender shall not be required to marshal any present or future security for, or guarantees of, the Obligations or to resort to any such security or guarantee in any particular order and each Borrower waives, to the fullest extent that it lawfully can: (a) any right it might have to require the Lender to pursue any particular remedy before proceeding against them; and (b) any right to the benefit of, or to direct the application of the proceeds of any collateral until the Obligations are paid in full.

17. Security . This Note and all other Obligations are secured by all assets of each Borrower whenever arising or created in accordance with the terms of the Loan Agreement and all other documents which create or perfect security interests in assets or properties of any Borrower. This Note and all other Obligations are further secured by that certain specific equipment of the Borrower to be purchased with the proceeds of the Loan.

18. Extension of Relevant Dates . In the event that any relevant date upon which a payment is due and payable under this Note or which affects any interest rate option of the Borrower shall fall on a date which is not a Banking Day, then any such relevant date may be extended by the Lender in accordance with the Modified Following Banking Day Convention and interest shall continue to accrue, and the relevant due dates shall also be extended, for the period of that extension at the interest rate or rates then in effect. For purposes hereof, the “Modified Following Banking Day Convention” shall mean the convention for adjusting any relevant date if it would otherwise fall on a day that is not a Banking Day. When used in conjunction with the term, “Modified Following Banking Day Convention”, and a date, such term shall mean that an adjustment will be made if that date would otherwise fall on a day that is not a Banking Day so that the date will be the first following day that is a Banking Day.

Notwithstanding anything to the contrary hereinabove contained, if application of the Modified Following Banking Day Convention would cause any payment due under the terms of this Note to be due and payable in a calendar month which differs from the month in which the payment would otherwise have been due, then, at the Lender’s option, the Modified Following Banking Day Convention shall not apply and such payment shall be due and payable on the immediately preceding Banking Day.

19. Joint and Several Obligations; Miscellaneous . This Note and all representations and covenants of the Borrower herein shall be the joint and several obligation of the Borrower

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Exhibit 10.61

and each provision of this Note shall apply to each and all jointly and severally and to the property and liabilities of each and all. This Note is the final, complete and exclusive statement of the terms governing this Note. No modification or amendment hereof shall be effective unless the same shall be in writing and signed by the Lender and the Borrower. If any provision of this Note shall to any extent by held invalid or unenforceable, then only such provision shall be deemed ineffective and the remainder of this Note shall not be affected. The provisions of this Note shall bind the heirs, executors, administrators, assigns and successors of each and every Borrower and shall inure to the benefit of Lender, its successors and assigns. This Note shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.

20. Acknowledgment of Borrower . The Borrower acknowledges receipt of a copy of this Note, and attests that each advance is to be used for general commercial purposes and that no part of such proceeds will be used, in whole or in part, for the purpose of purchasing or carrying any “margin stock” as such term is defined in Regulations U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.

21. COMMERCIAL TRANSACTION. EACH BORROWER ACKNOWLEDGES THAT THE ADVANCES EVIDENCED BY THIS NOTE ARE PART OF A COMMERCIAL TRANSACTION.

[This space intentionally left blank; signature page to follow.]

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Exhibit 10.61

This Note has been executed as a sealed instrument on the date first above written.

Arrhythmia Research Technology, Inc.

_____________________________ By: /s/ Salvatore Emma, Jr.


Witness	Salvatore Emma, Jr., President and Chief Executive Officer

Duly Authorized

Micron Products Inc.

_____________________________ By: /s/ Salvatore Emma, Jr.


Witness	Salvatore Emma, Jr., President and

Chief Executive Officer

Duly Authorized

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Exhibit 31.1

OFFICER'S CERTIFICATION

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Salvatore Emma, Jr., certify that:


1.	I have reviewed this report on Form 10-Q of Arrhythmia Research Technology, Inc. for the fiscal quarter ended June 30, 2015 ;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d -15(f)) for the registrant and have:


a.	designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;


d.	disclosed in this report any change in the registrant's internal controls over financial reporting that occurred during the registrant's second fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal controls over financial reporting; and


5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

DATE: August 13, 2015 /s/ Salvatore Emma, Jr.

Salvatore Emma, Jr.

President and Chief Executive Officer

(principal executive officer)

X-3

Exhibit 31.2

OFFICER'S CERTIFICATION

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Derek T. Welch, certify that:


1.	I have reviewed this report on Form 10-Q of Arrhythmia Research Technology, Inc. for the fiscal quarter ended June 30, 2015 ;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d -15(f)) for the registrant and have:


a.	designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;


d.	disclosed in this report any change in the registrant's internal controls over financial reporting that occurred during the registrant's second fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal controls over financial reporting; and


5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

DATE: August 13, 2015 /s/ Derek T. Welch

Derek T. Welch

Chief Financial Officer

(principal financial and accounting officer)

X-4

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Arrhythmia Research Technology, Inc. (the “Company”) for the quarter ended June 30, 2015 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned principal executive officer certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 13, 2015

/s/ Salvatore Emma, Jr.

Salvatore Emma, Jr.

President and Chief Executive Officer

(principal executive officer)

X-5

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Arrhythmia Research Technology, Inc. (the “Company”) for the quarter ended June 30, 2015 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned principal financial and accounting officer certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 13, 2015

/s/ Derek T. Welch

Derek T. Welch

Chief Financial Officer

(principal financial and accounting officer)

X-6