The following table presents the Company’s revenues disaggregated by geography:

The Company’s medical foodsClinical Nutrition revenues earned during the three months and nutraceuticals revenuessix months ended June 30, 2021 and 2020 are derived from distributors and individual retail customers in North America and international distributors. 68% of Medical Foods and Nutraceuticals revenues for the six months ended June 30, 2020 were due to the sale in June of a nutraceutical product to a Malaysian distributor. Medical DevicesAmerica. Diagnostics Equipment revenues are derived from a worldwide customer base consisting of both retail customers and distributors. International customers contributedSales to distributors were approximately 94%81% and 39%58% of Medical Devicestotal revenues for the six months ended June 30, 2021 and 2020, respectively, which included the Viactiv® product line from June 1, 2021 through June 30, 2021.

Revenues by geographical area are as follows:

Schedule of Revenue by Geographical Area

Business Combinations

The Company accounts for its business combinations using the acquisition method of accounting where the purchase consideration is allocated to the tangible and 2019, respectively. Distributors contributedintangible assets acquired, and liabilities assumed, based on their respective fair values as of the acquisition date. The excess of the fair value of the purchase consideration over the estimated fair values of the net assets acquired is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth and margins, future changes in technology, brand awareness and discount rates. Fair value estimates are based on the assumptions that management believes a market participant would use in pricing the asset or liability.

Investments

Short-term investments as of June 30, 2021, consist of a U.S. Treasury Bill, which is classified as held-to-maturity. The Company’s U.S. Treasury Bill matured July 29, 2021 and the proceeds were reinvested into another U.S. Treasury Bill that is scheduled to mature approximately 58%30 days from the date of purchase. Unrealized gains and 32%losses were de minimus. As of Medical Devices revenuesJune 30, 2021, the carrying value of the Company’s U.S. Treasury Bill approximates its fair value due to its short-term maturity.

Accounts Receivable

Accounts receivable are recorded net of an allowance for expected losses. Management evaluates the collectability of its trade accounts receivable and determines an allowance for doubtful accounts based on historical write-offs, known or expected trends, and the identification of specific balances deemed uncollectible based on a customer’s financial condition, credit history and the current economic conditions.

There was 0allowance for doubtful accounts as of June 30, 2021 and December 31,2020.

Inventories

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out (“FIFO”) basis. The Company records adjustments to its inventory for estimated obsolescence or diminution in net realizable value equal to the difference between the cost of the inventory and the estimated net realizable value. When evidence exists that the net realizable value of inventory is lower than its cost, the difference is recognized as a loss in the period in which it occurs. Once inventory has been written down, it creates a new cost basis for inventory that may not subsequently written up. For the three months and six months ended June 30, 2021 and 2020, there were 0 write-downs of inventory.

Intangible Assets

Amortizable finite-lived identifiable intangible assets consist of a trade name and 2019, respectively.customer relationships acquired in the acquisition of Activ effective June 1,2021 (See Note 3), and are stated at cost less accumulated amortization. The trade name and customer relationships are being amortized over a period of 10 years. The Company follows ASC 360 in accounting for finite-lived intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts. As of June 30, 2021, the Company determined there were 0 indicators of impairment of its intangible assets.

During February

At June 30, 2021 and December 31, 2020, the Company contracted withhas a Malaysian companytrademark for $50,000 classified as an indefinite-lived intangible asset.

Goodwill

Goodwill consists of the excess of the cost of Activ (see Note 3) over the fair value of amounts assigned to developassets acquired and liabilities assumed. Under the guidance of ASC 350, goodwill is not amortized, rather it is tested for impairment annually, and will be tested for impairment between annual tests if an immune-supportive formulaevent occurs or circumstances change that would indicate the carrying amount may be impaired. An impairment loss generally would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit and would be measured as the excess carrying value of goodwill over the derived fair value of goodwill. The Company’s policy is to perform an annual impairment testing for its consumer base. An initial order was placed for $875,000, and in connection with this order,reporting units on MarchDecember 31 2020, the Malaysian company paid $437,500 as a deposit for this order. The Company completed shipment of the product, received payment in full, and has recognized revenue for this order of $890,000 during the three months ended June 30, 2020. The sample product order is a proprietary immune-supportive formula that consists of a two-bottle package, each bottle containing different blends of certain ingredients the formulation of which is proprietary to the Malaysian company. The product is designed by the Malaysian company to boost immune system capability, which the Malaysian company intends to sell to its consumer base.fiscal year.

Concentrations

During the three months ended June 30, 2020, the Medical Foods and Nutraceuticals segment had one customer who2021, two customers accounted for approximately 75% of the Company’s sales. During the three months ended June 30, 2019, the Medical Devices segment had one customer who accounted for approximately 24% 39% and 13% of the Company’s sales. No other customer accounted for more than 10% of sales in either period.during the three months ended June 30, 2021 or 2020.

During the six months ended June 30, 2020, the Medical Foods and Nutraceuticals segment had one customer who2021, two customers accounted for approximately 62% of the Company’s sales. During the six months ended June 30, 2019, the Medical Devices segment had one customer who accounted for approximately 26%33% and 11% of the Company’s sales. No other customer accounted for more than 10% of sales in either period.

During the three months ended June 30, 2020, three of the Company’s largest vendors accounted for 12%, 36%, and 44% of all purchases. During the three months ended June 30, 2019, two vendors accounted for 34%, and 47% of all purchases. Duringduring the six months ended June 30, 2020, three2021 or 2020.

Cash balances are maintained at large, well-established financial institutions. At times, cash balances exceed federally insured limits. Insurance coverage limits are $250,000 per depositor at each financial institution. The Company believes that no significant concentration of credit risk exists with respect to its cash balances because of its assessment of the Company’s largest vendors accounted for 17%, 24%,creditworthiness and 40%financial viability of all purchases. During the six months ended June 30, 2019, three vendors accounted for 20%, 24%, and 32% of all purchases. No other vendors exceeded 10% of all purchases during any periods presented.financial institutions that hold such cash balances.

Research and Development Costs

Research and development costs consist primarily of fees paid to consultants and outside service providers, and other expenses relating to the acquisition, design, development and testing of the Company’s medical foods and relatedClinical Nutrition products. Research and development expenditures are expensed as incurred and totaled $75,769$16,756 and $106,716$44,581 for the three months ended June 30, 2021 and 2020, respectively, and $37,364 and $75,769 for the six months ended June 30, 2021 and 2020, and 2019, respectively.

Patent Costs

The Company is the owner of four issued domestic patents, two pending domestic patent applications and one issued foreigngranted patent in Europe and the United Kingdom, two issued foreign patents in Ireland, and one issued foreign patent in Hong Kong.Canada. Due to the significant uncertainty associated with the successful development of one or more commercially viable products based on the Company’s research efforts and any related patent applications, patent costs, including patent-related legal fees, filing fees and internally generated costs, are expensed as incurred. During the six months ended June 30, 20202021, and 2019,2020, patent costs were $60,501 $34,940 and $64,482,$60,501, respectively, and are included in general and administrative costs in the statements of operations.

Stock-Based Compensation

The Company periodically issues stock-based compensation to officers, directors, contractorsemployees and consultantsnon-employees in non-capital raising transactions for services rendered.and for financing costs. Such issuancesgrants vest and expire according to terms established at the issuance date.

Stock-based payments to officers, directors, employees, The Company accounts for such grants issued and for acquiring goods and services from nonemployees, which include grants of employee stock options, are recognized in the financial statementsvesting based on their fair values in accordance with Topic 718. Stock option grants, which are generally time vested, will beASC 718, Compensation-Stock Compensation whereby the value of the award is measured aton the date of grant date fair value and charged to operationsrecognized for employees as compensation expense on a straight-line or graded basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services.

The fair value of stock options granted is determined utilizingestimated using the Black-Scholes option-pricing model, which is affected by several variables, including theuses certain assumptions related to risk-free interest rate, therates, expected dividend yield, thevolatility, expected life, ofand future dividends. The assumptions used in the equity award,Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.

Loss per Common Share

Basic loss per share is computed by dividing net loss by the exercise price of the stock option as compared to the fair market value of theweighted-average common stockshares outstanding during a period. Diluted earnings per share is computed based on the grant date andweighted-average common shares outstanding plus the estimated volatilityeffect of the common stock over the term of the equity award.

Net Loss per Share

The Company’s computation of basic and diluted net loss per common share is measured as net loss divided by the weighted averagedilutive potential common shares outstanding during the respective periods, excluding unvested restricted common stock. Shares of restrictedperiod calculated using the treasury stock are included in the basic weighted average number ofmethod. Dilutive potential common shares outstanding from the time they vest. Potential commoninclude shares such as from unexercised warrants and options thatoptions. Potential common share equivalents have an anti-dilutive effect arebeen excluded from the calculation of diluted net loss per share.where their inclusion would be anti-dilutive. The Company’s basic and diluted net loss per share is the same for all periods presented becausethe Company had a net loss for all periods presented and all shares issuable upon exercise of warrants and conversion of convertible debt outstanding are anti-dilutive as they decrease loss per share.options would therefore be anti-dilutive.

The following table sets forth the number ofpotentially dilutive shares were excluded from the computationshares used to calculate diluted earnings per share:

Schedule of diluted loss per share, as their inclusion would have been anti-dilutive:Antidilutive Securities Excluded from Computation of Earnings Per Share

Fair Value Measurementsof Financial Instruments

AssetsAccounting standards require certain assets and liabilities recordedbe reported at fair value in the financial statements and provide a framework for establishing that fair value. Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts and considers assumptions that market participants would use when pricing the asset or liability. The framework for determining fair value is based on the balance sheets are categorized based upon the level of judgment associated witha hierarchy that prioritizes the inputs and valuation techniques used to measure the fair value. Level inputs are as follows:value:

Level 1 – quoted- Quoted prices in active markets for an identical assetsasset or liabilities.liability that the Company has the ability to access as of the measurement date.

Level 2 –- Inputs, other significantthan quoted prices included within Level 1, which are directly observable inputs for the assetsasset or liabilitiesliability or indirectly observable through corroboration with observable market data.

Level 3 - Unobservable inputs in which there is little or no market data atfor the asset or liability which requires the reporting entity to develop its own assumptions.

The Company determines the level in the fair value hierarchy within which each fair value measurement date.

Level 3 –falls in its entirety, based on the lowest level input that is significant unobservable inputs that reflect management’s best estimateto the fair value measurement in its entirety. In determining the appropriate levels, the Company performs an analysis of what market participants would use to price the assets orand liabilities at each reporting period end.

The Company believes the measurement date.

We consider carrying amountsamount of its financial instruments (consisting of cash, short-term investments, accounts receivable, and accounts payable and accrued expenses to approximateliabilities) approximates fair value due to the short-term nature of these financialsuch instruments. Our non-financial assets are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized.

As of June 30, 2020, andAt December 31, 2019,2020, the Company’s balance sheets included Level 2 liabilities comprised of the fair value of warrant liabilities aggregating $19,411 and $13,323, respectively.of $25,978(see Note 9). At June 30, 2021, the Company had 0warrant liabilities.

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The new standard will be effective beginning January 1, 2021. The Company is assessing the impact ASU 2019-12 will have on its consolidated financial statements.

In June 2016, the FASBFinancial Accounting Standards Board (the “FASB”) issued ASU No.Accounting Standards Update (“ASU”) 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”ASU 2016-13”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. As a smaller reporting company, the standardASU 2016-13 will be effective for us for interim and annual reporting periodsthe Company beginning after December 15, 2022.January 1, 2023, with early adoption permitted. The Company is currently assessing the impact of adopting this standard on the Company’s financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 of the two-step goodwill impairment test, under which a goodwill impairment loss was measured by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-04 requires only a one-step quantitative impairment test, whereby a goodwill impairment loss is measured as the excess of a reporting unit’s carrying amount over its fair value (not to exceed the total goodwill allocated to that reporting unit). Entities are required to apply ASU 2017-04 on a prospective basis. ASU 2017-04 was effective January 1, 2020. The adoption of ASU 2017-04 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions and enhances and simplifies various aspects of the income tax accounting guidance in ASC 740. ASU 2019-12 was effective January 1, 2021. The adoption of ASU 2019-12 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. For contracts in an entity’s own equity, the type of contracts primarily affected by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. This update simplifies the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective January 1, 2024, for the Company and the provisions of this update can be adopted using either the modified retrospective method or a fully retrospective method. Early adoption is permitted, but no earlier than January 1, 2021.

At December 31, 2020, the Company had recorded a derivative liability of $25,978 related to 10,417 warrants issued in 2019 because the settlement provisions of the warrants contained language that the shares underlying the warrants are required to be registered. Effective January 1, 2021, the Company early adopted ASU 2020-06 using the modified retrospective approach. ASU 2020-06 removed the requirement to consider if the warrants would be settled in registered shares, and accordingly, the adoption of ASU 2020-06 resulted in a decrease to accumulated deficit of $25,978 and a decrease in derivative warrant liability of $25,978 on January 1, 2021.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt ASU 2021-04 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The adoption of ASU 2021-04 is not expected to have any impact on the Company’s consolidated financial statement presentation or disclosures.

Other recent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management does not believe that there are any recently issued, but not yet effective, authoritative guidance, if currently adopted, wouldto have a material impact on the Company’s present or future financial statement presentation or disclosures.statements.

Effective September 20, 2019 (the “Effective Date”3.Acquisition of Activ Nutritional, LLC.

On June 1, 2021, the Company completed the acquisition of Activ. The acquisition was made pursuant to an equity purchase agreement dated May 18, 2021 between the Company, Adare Pharmaceuticals, Inc., (“Adare”), and Activ. The Company acquired all of the issued and outstanding equity of Activ from Adare for $26,000,000 in cash, subject to certain adjustments as provided in the equity purchase agreement.

Activ owns the Viactiv® line of supplement chews for bone health, immune health and other applications which are currently marketed through many of the nation’s largest retailers, including, among others, Walmart (retail and online), Target and Amazon. The Viactiv product lines are expected to become the Company’s newly-formed wholly-owned subsidiary, NutriGuard Formulations, Inc., a Delaware corporation, completed an assetmost prominent product lines for the foreseeable future.

The Company utilized the acquisition method of accounting for the acquisition in accordance with ASC 805, Business Combinations. The Company allocated the purchase agreement (the “Asset Purchase Agreement”)price to Activ’s tangible assets, identifiable intangible assets, and assumed liabilities at their estimated fair values as of the date of acquisition. The fair value of the intangible assets was estimated using the income approach, pursuant to which after-tax cash flows are discounted to present value based on projections and other available financial data. The cash flows were based on estimates used to value the acquisition, and the discount rates applied were benchmarked with NutriGuard Research, Inc., a California corporation (“NutriGuard”),reference to the implied rate of return from the transaction model, as well as the weighted average cost of capital. The valuation assumptions took into consideration the Company’s estimates of customer attrition and NutriGuard’s sole shareholder, Mark McCarty.revenue growth projections. The excess of the purchase price paid by the Company over the estimated fair value of identified tangible and intangible assets has been recorded as goodwill.

The following table summarizes the allocation of the fair value of the purchase consideration to the fair value of tangible assets, identifiable intangible assets, and assumed liabilities of Activ on the date of acquisition:

Schedule of Fair Value of Assets Acquired and Liabilities Assumed

Pursuant toThe Company consolidated Activ’s operations with the Asset Purchase Agreement,Company’s operations commencing June 1, 2021, the Company purchased specified assetsclosing date of the NutriGuard brand and business, consisting primarily of inventory, trademarks, copyrights and other intellectual property. In exchange, the Company agreed to pay a 3% royalty, payable quarterly, to NutriGuard based on the operating results of the NutriGuard branded productstransaction. Activ’s operations are included in future periods, after $500,000 in specified gross revenues have been achieved by the Company. As of June 30, 2020 and December 31, 2019 no amounts were owed or accrued to NutriGuard.

The following preliminary unaudited pro forma financial information gives effect to the Company’s acquisitionClinical Nutrition segment. The amount of NutriGuard as if the acquisition had occurred on January 1, 2019revenue and had beennet income of Activ included in the Company’s consolidated statements of operations during the three months and six months ended June 30, 2019:2021, was $1,049,803 and $231,288, respectively.

Acquisition-related transaction costs (e.g., legal, due diligence, valuation, investment banking and other professional fees) are not included as a component of consideration transferred, but were expensed as incurred. During the three months and six months ended June 30, 2021, the Company incurred approximately $2,104,000 of acquisition-related costs, which are included as a line item in the Company’s consolidated statements of operations.

Pro Forma Information

The following unaudited pro forma condensed consolidated statement of operations for the three months and six months ended June 30, 2021 and 2020 is presented as if the acquisition of Activ had occurred on January 1, 2020, after giving effect to certain pro forma adjustments. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the acquisition had actually been consummated on January 1, 2020. These results are prepared in accordance with ASC 606.

Schedule of Pro Forma Financial Information

Trade name and trademarks, and customer relationship intangible assets are being amortized over an estimated useful life of 10 years. The pro forma adjustments include a net increase in amortization expense to record amortization expense for the $11,900,000 of acquired net identifiable intangible assets, and an adjustment to present acquisition-related transaction costs and other one-time costs directly attributable to the acquisition as if they were incurred in the earliest period presented.

4.Inventories

Inventories consisted of the following:

Schedule of Inventories