Summary of Significant Accounting Policies | Note 3 — Summary of Significant Accounting Policies Reverse Stock Split On December 20, 2016, the Company filed with the State of Delaware the Seventh Amended and Restated Certificate of Incorporation for a one-for Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America require management to make estimates and assumptions that affect certain reported amounts and disclosures. These estimates and assumptions are reviewed on an on-going Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist principally of deposit accounts and money market accounts at December 31, 2017. As of December 31, 2016, the Company had no cash equivalents. Accounts Receivable and Allowance for Doubtful Accounts The Company reports accounts receivable at invoiced amounts less an allowance for doubtful accounts. The Company evaluates its accounts receivable on a continuous basis, and if necessary, establishes an allowance for doubtful accounts based on a number of factors, including current credit conditions and customer payment history. The Company does not require collateral or accrue interest on accounts receivable and credit terms are generally 30 days. No allowance for doubtful accounts was necessary at December 31, 2017 and 2016. Inventories Inventories are recorded at the lower of cost or net realizable value. Cost is determined using a specific identification method. The Company reduces the carrying value of inventory for those items that are potentially excess, obsolete or slow-moving based on changes in customer demand, technology developments or other economic factors. In addition, the carrying value of consigned inventories is reduced by the value of MyPro devices that will not be sold based on historical experience. Restricted Cash Restricted cash consisted of cash deposited with a financial institution as collateral for Company credit cards for sales personnel. Deferred Offering Costs Deferred offering costs are comprised of direct incremental legal, accounting and financial advisor fees related relating to capital raising efforts. Deferred offering costs are offset against proceeds of an offering. In the event a capital raising effort is terminated, deferred offering costs are expensed. Equipment Equipment is stated at historical cost, net of accumulated depreciation and is depreciated using the straight-line method over the estimated useful lives of the related assets, generally three years. Expenditures for maintenance and repairs, which do not extend the economic useful life of the related assets, are charged to operations as incurred, and expenditures, which extend the economic life, are capitalized. When assets are retired, or otherwise disposed of, the costs and related accumulated depreciation or amortization are removed from the accounts and any gain or loss on disposal is recognized. Impairment of Long Lived Assets The Company assesses the recoverability of its long-lived assets, including equipment when there are indications that the assets might be impaired. When evaluating assets for potential impairment, the Company compares the carrying value of the asset to its estimated undiscounted future cash flows. If an asset’s carrying value exceeds such estimated cash flows (undiscounted and with interest charges), the Company records an impairment charge for the difference. Based on its assessments, the Company did not record any impairment charges for the years ended December 31, 2017 and 2016. Demonstration and Test Units Demonstration units represent units provided to customers by the Company for marketing and patient evaluation purposes. These units are manufactured by the Company and are recorded at cost in the statements of operations as part of selling, marketing and general administrative expense. During the years ended December 31, 2017 and 2016, respectively, the Company charged to operations approximately $26,900 and $22,900, respectively, of these units. Test units represent units provided to research and development staff to use in their development process and to end users who are given free units to act as testers so that research and development staff can evaluate and understand their use by patients. A primary objective of these units is to determine when and under what conditions they fail, at which time they are analyzed for cause of failure and then scrapped. These units are recorded at cost in the statements of operations as part of research and development expense. During the year ended December 31, 2017 and 2016 the Company charged to operations approximately $29,200 and $48,000, respectively, of these units. Accounts Payable and Other Accrued Expenses: 2017 2016 Trade payables $ 264,890 $ 311,085 Accrued compensation and benefits 642,425 221,630 Accrued directors fees 100,000 — Accrued offering costs — 77,326 Other 269,921 103,969 $ 1,277,236 $ 714,010 Preferred Stock The Company applies the accounting standards for distinguishing liabilities from equity under U.S. GAAP when determining the classification and measurement of its convertible preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as permanent equity. The Company’s preferred shares at December 31, 2016 featured certain redemption rights that were considered by the Company to be outside the Company’s control. Accordingly, the Series A-1 B-1 As of the issuance date, the carrying amount of the Preferred Stock was less than the redemption value. If the Preferred Stock is redeemable at the investor’s option, the carrying value would be increased by periodic accretions so that the carrying value would equal the redemption amount at the earliest redemption date. Such accretion would be recorded as a preferred stock dividend. Derivative Liabilities The Company accounts for warrants determined to be derivative financial instruments by recording the warrants as a liability at fair value and marks-to-market Revenue Recognition The Company derives revenue primarily from the sale of its products to orthotics and prosthetics practices, as well as Veteran Administration and other hospitals and, beginning in 2017, through a distribution agreement with Ottobock. The Company recognizes revenue upon shipment, provided that persuasive evidence of an arrangement exists, there are no uncertainties regarding customer acceptance, the sales price is fixed or determinable, and collectability is deemed probable. In certain cases, the Company ships the MyPro device to O&P practices pending reimbursement from third party payors. As a result of this arrangement, elements of the revenue recognition criteria have not been met upon shipment of the MyoPro. The Company recognizes revenue when payment has been received, as all of the revenue recognition criteria has been met. During 2017, effective with its introduction of its extended product line, the Company provides a standard three-year warranty. This revenue is recognized ratably over the warranty period. The Company allocates revenue to the warranty element of a sale based upon its fair value as determined by referencing the historical selling price of it in similar transactions. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of relief from certain reporting requirements and other burdens that are otherwise applicable generally to public companies. These provisions include an exemption from the adoption of new or revised financial accounting standards until they would apply to private companies. As such, we have delayed the adoption of Accounting Standards Codification (“ASC”) No. 606, Revenue from Contracts with Customers until January 1, 2019. The Company receives federally-funded grants that require the Company to perform research activities as specified in each respective grant. The Company is paid based on the fees stipulated in the respective grants which approximate the projected costs to be incurred by the Company to perform such activities. The Company’s grant revenue is recognized when persuasive evidence of the arrangement exists, the service has been provided and adherence to specific parameters of the awarded grant have been met, the amount is fixed and determinable and collection is reasonable assured. The Company recognized approximately $118,100, $20,800 and $131,900, respectively, of grant income in 2017, 2016 and 2015, respectively. Direct costs related to these grants are reported as a component of research and development costs in the statements of operations except for reimbursable costs which are reported as a component of cost of revenue in the statements of operations. Cost of revenue includes reimbursable costs of approximately $11,600 and $10,100 in 2017 and 2016, respectively. Amounts received in advance are deferred. Shipping and Handling Costs Shipping and handling costs paid by customers are netted against the related shipping costs we incur. The net cost is recorded in cost of sales. Historically, such costs have not been material. Income Taxes The Company accounts for income taxes under Accounting Standards Codification ASC 740 Income Taxes (“ASC 740”). Under ASC 740, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. ASC 740 requires that the tax effects of changes in tax laws or rates be recognized in the financial statement in the period in which the law is enacted. ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Tax benefits claimed or expected to be claimed on a tax return are recorded in the Company’s financial statements. A tax benefit from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Uncertain tax positions have had no impact on the Company’s financial condition, results of operations or cash flows. The Company files income tax returns in federal and state jurisdictions and is no longer subject to examinations by tax authorities for years prior to 2014. Currently, there are no income tax audits in process. Stock-Based Compensation The Company accounts for stock awards to employees by measuring the cost of services received in exchange for the award of equity instruments based upon the fair value of the award on the date of grant. The fair value of that award is then ratably recognized as expense over the period during which the recipient is required to provide services in exchange for that award. Options and warrants granted to consultants and other non-employees Stock-based compensation expense of approximately $279,500 and $94,100 was recorded in selling, general and administrative expense in 2017 and 2016, respectively. Net Loss per Share Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus potentially dilutive common shares. Convertible debt, preferred stock, restricted stock units, stock options and warrants are excluded from the diluted net loss per share calculation when their impact is antidilutive. The Company reported a net loss for the years ended December 31, 2017 and 2016, respectively, and as a result, all potentially dilutive common shares are considered antidilutive for these periods. Potentially common shares issuable at December 31, 2017 and 2016 consist of: 2017 2016 Options 369,004 246,344 Warrants 6,277,443 10,781 Series B-1 — 1,662,104 Series A-1 — 960,083 Total 6,646,447 2,879,312 Advertising The Company charges the costs of advertising to operating expenses as incurred. Advertising expense amounted to approximately $31,000 and 41,600 in 2017 and 2016, respectively. Research and Development Costs The Company expenses research and development costs as incurred. Research and development costs primarily consist of salaries and benefits, facility and overhead costs, and outsourced research activities. Reclassification Certain amounts in the 2016 financial statements of operations have been reclassified to conform to the 2017 presentation. These reclassifications had no impact on previously reported net loss. Subsequent Events The Company evaluates events and/or transactions occurring after the balance sheet date and before the issue date of the financial statements to determine if any of those events and/or transactions require adjustment to or disclosure in the financial statements. Revision of Financial Statements During the preparation of its Offering Circular Supplement for the quarterly period ended March 31, 2017, the Company determined it had improperly classified its Notes Payable, MLSC and certain related accrued interest as long-term liabilities, which resulted in an understatement of current liabilities as of December 31, 2016. The Company assessed the materiality of the misstatement in accordance with Staff Accounting Bulletin No. 99, “Materiality” and No. 108, “Quantifying Misstatements”, and concluded that these classification errors were not qualitatively material and there was no impact on the Company’s condensed statements of operations, cash flows, changes in redeemable and convertible preferred stock and stockholders’ equity (deficiency) and net loss per share for the years then ended, nor on the Company’s stockholders’ equity (deficiency). As such, the correction of the error is reflected in the December 31, 2016 balance sheet. Disclosure of the revised amounts will also be reflected in future filings containing the applicable periods. The effect of this revision on the line items within the Company’s balance sheet as of December 31, 2016 was as follows: December 31, 2016 As previously Adjustment As revised Total current liabilities $ 1,807,311 $ 1,193,984 $ 3,001,295 Non-current 4,709,156 (1,193,984 ) 3,515,172 Total liabilities $ 6,516,467 $ — $ 6,516,467 Recent Accounting Pronouncements Revenue Related Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, 2014-09”). 2014-09 2014-09 2014-09 No. 2015-14, No. 2014-09 ASU 2014-09 2016-08 In March 2016, the FASB issued ASU No. 2016-08, ASU No. 2014-09 — 2014-09, ASU 2016-08 On May 2016, the FASB issued ASU No. 2016-12, (“ASU 2016-12”). 2016-12 2014-09. 2014-09, In September 2017, the FASB issued ASU No. 2017-13, The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of relief from certain reporting requirements and other burdens that are otherwise applicable generally to public companies. These provisions include an exemption from the adoption of new or revised financial accounting standards until they would apply to private companies. As such, the Company has delayed the adoption of Accounting Standards Codification (“ASC”) No. 606, Revenue from Contracts with Customers until January 1, 2019. Other Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, 2016-02”). 2016-02 ASU 2016-02 ASU 2016-02 2016-02 In March 2016, the FASB issued ASU No. 2016-09, In August 2016, the FASB issued ASU 2016-15, 2016-15 In November 2016, the FASB issued ASU 2016-18, 2016-18 In May 2017, the FASB issued ASU No. 2017-09, 2017-09 In July 2017, the FASB issued ASU No. 2017-11, No. 2017-11 No. 2017-11 No. 2017-11 No. 2017-11 No. 2017-11 No. 2017-11. 2017-11 Subsequent Events The Company evaluated subsequent events through the date the financial statements were issued, and determined that, except as disclosed herein, there have been no subsequent events that would require recognition in the financial statements or disclosure in the notes to the financial statements. |