| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES Principles of Consolidation The accompanying condensed consolidated
financial statements include the accounts of MYOS RENS Technology Inc. and its wholly-owned subsidiary, Atlas Acquisition Corp.
All material intercompany balances and transactions have been eliminated in consolidation. Reclassification of Prior Period
Presentation Certain prior
year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no impact
on the Company's prior year net loss or stockholders' equity. Use of Estimates The preparation of condensed consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, equity and the disclosures of contingent assets and liabilities at the date of the condensed
consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates
requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition,
situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management
considered in formulating its estimate, could change in the near term due to one or more future non-conforming events. Accordingly,
the actual results could differ significantly from estimates. Significant items subject to such estimates include but are not limited
to the valuation of stock-based awards, measurement of allowances for doubtful accounts and inventory reserves, the amount of deferred
offering costs recognized, the selection of asset useful lives, fair value estimations used to test long-lived assets, including
intangibles, impairments and provisions necessary for assets and liabilities. Management's estimates, including
evaluation of impairment of long-lived assets and inventory reserves are based in part on forecasted future results. A variety
of factors could cause actual results to differ from forecasted results and these differences could have a significant effect on
asset carrying amounts. Management believes that we have the ability to sell raw materials to a third party in the event the Company
does not obtain the requisite amount of revenue. Cash and Cash Equivalents The Company considers all highly liquid
investments purchased with a maturity of three months or less and money market accounts to be cash equivalents. At June 30, 2019
and December 31, 2018 the Company had no cash equivalents. As part of our ongoing liquidity assessments, management evaluates our
cash and cash equivalents. The Company maintains its bank accounts with high credit quality financial institutions and has never
experienced any losses related to these bank accounts. The Company minimizes its credit risk associated with cash by periodically
evaluating the credit quality of its financial institutions. The amount of funds held in these accounts can fluctuate due to the
timing of receipts and payments in the ordinary course of business and due to other reasons, such as business-development activities
so the Company may at times have exposure to cash in excess of FDIC insured limits. At June 30, 2019, total cash was $1,158, which
exceeded the FDIC coverage limit of $250 by $908. There were no accounts that exceeded the FDIC limit at December 31,
2018. Inventory Reserves Inventories are valued at the lower of
cost or net realizable value, with cost determined on a first in, first-out basis. Each quarter the Company evaluates the need
for a change in the inventory reserve based on projected future sales and expiration dates of products. Our policy is to recognize
an inventory reserve as a loss in earnings in the period in which evidence exists that the net realizable value of inventory is
less than its cost due to damage, physical deterioration, obsolescence, and changes in inventory reserve estimates, changes in
price levels or other causes. Net realizable value is the estimated selling price in the ordinary course of business, less costs
to complete and sell finished goods, including direct selling costs such as transportation and sales commissions as well as inventory
write-offs. The multiple possible outcomes that can result from applying lower of cost or net realizable value can make inventory
valuation highly complex. For the six months ended June 30, 2019, no additional reserve was recorded within cost of sales on the
condensed consolidated statements of operations. Deferred Offering Costs The Company defers as other assets
the direct incremental costs of raising capital until such time as the offering is completed. At the time of the completion
of the offering, the costs are charged against the capital raised. Should the offering not be completed, deferred offering
costs are charged to operations during the period in accordance with SEC guidance. Since the February 21, 2017 sales
agreement expired by June 30, 2018, the remaining deferred offering costs of $96 on the Company's condensed
consolidated balance sheets were recognized and recorded within the Company's condensed consolidated statements of
operations as general and administrative expenses. On July 24, 2018, the Company entered into
a new sales agreement, incurring $108 of deferred offering costs. As of June 30, 2019, $92 of deferred offering costs is included
as a long-term asset on the accompanying condensed consolidated balance sheet. Leases The Company determines if an arrangement
is a lease at inception. Operating lease assets and liabilities are included in operating lease right of use ("ROU")
lease assets, current portion of operating lease liabilities, and long-term operating lease liabilities on the Company's
condensed consolidated balance sheets. Operating lease right of use assets represent
the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation
to make lease payments arising from the lease. Operating lease right of use assets and liabilities are recognized at the commencement
date of the lease based on the present value of lease payments over the lease term. Since the Company's leases do not provide
an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in
determining the present value of lease payments. The operating lease right of use assets also include any lease payments made and
excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably
certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over
the lease term. Fair Value of Long-Lived Assets We test long-lived assets, including fixed
assets and intangibles with finite lives, for recoverability when events or changes in circumstances indicate that the net carrying
amount is greater than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that
are largely independent of the cash flows of other groups of assets. We consider historical performance and future estimated results
in our evaluation of potential impairment and then compare the carrying amount of the asset to the future estimated cash flows
expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future
cash flows, we measure the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation
of fair value is generally measured by discounting expected future cash flows at the rate we utilize to evaluate potential investments.
We estimate fair value based on the information available in making the necessary estimates, judgments and projections. Concentrations of Credit Risk Management regularly
reviews accounts receivable, and if necessary, establishes an allowance for doubtful accounts that reflects management's
best estimate of amounts that may not be collectible based on historical collection experience and specific customer information.
Bad debt expense recognized as a result of an allowance for doubtful accounts is classified under general and administrative expenses
in the statements of operations. If we are unable to collect our outstanding accounts receivable from our distributors, or if our
distributors are unable or unwilling to purchase our products, our operating results and financial condition will be adversely
affected. Fixed Assets Fixed assets are stated at cost and depreciated
to their estimated residual value over their estimated useful lives of 3 to 7 years. Leasehold improvements are amortized over
the lesser of the asset's useful life or the contractual remaining lease term, including expected renewals. When assets are
retired or otherwise disposed of, the assets and related accumulated depreciation are reversed from the accounts and the resulting
gains or losses are included in the condensed consolidated statements of operations. Depreciation is provided using the straight-line
method for all fixed assets. Repairs and maintenance costs are expensed as incurred. Intangible Assets The Company's intangible assets consist
primarily of intellectual property pertaining to Fortetropin ® In July 2014, the Company acquired
the United States patent application for the manufacturing of Fortetropin ® Intangible assets also includes patent costs associated with applying for a patent and being issued
a patent. Costs to defend a patent and costs to invalidate a competitor's patent or patent application are expensed as incurred.
Upon issuance of the patent, capitalized patent costs are reclassified from intangibles with indefinite lives to intangibles with
finite lives and amortized on a straight-line basis over the shorter of the estimated economic life or the initial term of the
patent, generally 20 years. Our policy is to evaluate intangible assets
subject to amortization for possible impairment whenever events or changes in circumstances indicate that the carrying amount of
such assets may not be recoverable. Impairment testing of intangible assets subject to amortization involves comparing the carrying
amount of the asset to the forecasted undiscounted future cash flows. In the event the carrying value of the asset exceeds the
undiscounted future cash flows, the carrying value is considered not recoverable and an impairment exists. An impairment loss is
measured as the excess of the asset's carrying value over its fair value, calculated using a discounted future cash flow
method. The computed impairment loss is recognized in the period that the impairment occurs. Assets which are not impaired may
require an adjustment to the remaining useful lives for which to amortize the asset. There were no impairment charges for
the three and six months ended June 30, 2019 and the year ended December 31, 2018. Intangible assets at June 30, 2019 and
December 31, 2018 consisted of the following:
June 30, December 31,
2019 2018
Intangibles with finite lives:
Intellectual property $ 2,101 $ 2,101
Website - qurr.com 380 380
Less: accumulated amortization – intellectual property (1,100 ) (994 )
Less: accumulated amortization – website (301 ) (242 )
Total intangible assets, net $ 1,080 $ 1,245 Assuming no additions, disposals or adjustments
are made to the carrying values and/or useful lives of the intangible assets, amortization expense for intangible assets is estimated
to be as follows:
Years Ended December 31, Amount
2019 (remaining six months) $ 184
2020 210
2021 210
2022 210
2023 210
2024 56
Total $ 1,080 Net Revenues Revenue Recognition Net revenues include products and shipping
and handling charges, net of estimates for incentives and other sales allowances or discounts. Our product sales generally do not
provide for rights of return. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring
products. All revenue is recognized when we satisfy our performance obligations under the contract. We recognize revenue by transferring
the promised products to the customer, with revenue recognized at the point in time the customer obtains control of the products.
We consider charges associated with shipping and handling activities as costs to fulfill our performance obligations. Using probability
assessments, we estimate sales incentives expected to be paid over the term of the contract. The majority of our contracts have
a single performance obligation and are short term in nature. Sales taxes that are collected from customers and remitted to governmental
authorities are accounted for on a net basis and therefore are excluded from net sales. Accounts Receivable Credit is extended based upon an evaluation
of the customer's financial condition. Accounts receivable are stated at their estimated net realizable value. Any allowance
for doubtful accounts is based on an analysis of customer accounts and historical experience. An account that is past due for three
months will be flagged as delinquent and after six months will be sent to collection if necessary. An account past due after one
year will be in consideration to be written off as a bad debt. Contract Liabilities Contract liabilities may include deferred
revenue related to customer payments made in advance of the customer obtaining control of the product, as well as liabilities associated
with sales incentives. At June 30, 2019, and December 31, 2018, the Company had no contract liability balances. Disaggregation of Net
Revenues Our net revenues by product type are presented
below for the three and six months ended June 30, 2019 and 2018.
Three months ended
June 30 June 30,
Product Type 2019 2018
Myos Canine Muscle Formula® (1) $ 89 $ 3
Yolked® (2) 53 15
Qurr® (3) 11 63
Physician Muscle Health Formula (4) 1 7
Total Net Revenues $ 154 $ 88
Six months ended
Product Type June 30, June 30,
Myos Canine Muscle Formula® (1) $ 150 3
Yolked® (2) 121 15
Qurr® (3) 27 113
Physician Muscle Health Formula (4) 5 14
Total Net Revenues $ 303 145
(1) Launched in June 2018
(2) Launched in March 2018
(3) Launched in June 2017
(4) Launched in May 2016 Advertising The Company charges advertising expenses
to selling, marketing and research as incurred. These expenses were $467 and $259 for the six months ended June 30, 2019 and 2018,
respectively, and $131 and $109 for the three months ended June 30, 2019 and 2018, respectively. Research and Development Research and development expenses consist
primarily of operating expenses, the cost of manufacturing our product for clinical study, the cost of conducting clinical studies
and the cost of conducting preclinical and research activities. Research and development expenses were $89 and $291 for the six months ended June 30, 2019 and 2018, respectively,
and $80 and $105 for the three months ended June 30, 2019 and 2018, respectively. Shipping and Handling The Company records expenses for shipping
and handling of products to our customers as cost of sales. These expenses were $16 and $24 for the six months ended June 30, 2019
and 2018, respectively, and were $10 and $19 for the three months ended June 30, 2019 and 2018, respectively. Stock-based Compensation Stock-based payments are measured at their
estimated fair value on the date of grant. Stock-based awards to non-employees are re-measured at fair value each financial reporting
date until performance is completed. Stock-based compensation expense recognized during a period is based on the estimated number
of awards that are ultimately expected to vest. For stock options and restricted stock that do not vest immediately but which
contain only a service vesting feature, we recognize compensation cost on the unvested shares and options on a straight-line basis
over the remaining vesting period. These expenses are included as personnel and benefits within the condensed consolidated statements
of operations. Stock-based compensation expenses were $71 and $165 for the six months ended June 30, 2019 and 2018, respectively,
and were $28 and $42 for the three months ended June 30, 2019 and 2018, respectively. The Company uses the Black-Scholes option-pricing
model to estimate the fair value of stock options and the market price of our common stock on the date of grant for the fair value
of restricted stock issued. Our determination of the fair value of stock-based awards is affected by our stock price as well as
assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our
expected stock price volatility over the term of the awards, and certain other market variables such as the risk-free interest
rate. Segment Information Accounting Standards Codification ("ASC")
280, Disclosures about Segments of an Enterprise and Related Information Fair Value Measurement Fair value is the price that would be received
to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants. The authoritative
guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring
basis whereby observable and unobservable inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchy levels
of inputs to measure fair value:
Level 1 Inputs that utilize quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Inputs that utilize observable quoted prices for similar assets and liabilities in active markets and observable quoted prices for identical or similar assets in markets that are not very active.
Level 3: Inputs that utilize unobservable inputs and include valuations of assets or liabilities for which there is little, if any, market activity. A financial asset or liability's
classification within the above hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
At June 30, 2019 and December 31, 2018 the Company's financial instruments consisted primarily of cash and cash equivalents,
accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses and other current liabilities.
Due to their short-term nature, the carrying amounts of the Company's financial instruments approximated their fair values. Basic and Diluted Loss Per Share Basic net loss per share is computed by
dividing net loss available to common stockholders for the period by the weighted average number of common shares outstanding during
the period. Diluted net loss per share is computed by dividing net loss for the period by the weighted average number of common
shares outstanding during the period increased to include the number of additional shares of common stock that would have been
outstanding if potential dilutive securities outstanding had been issued. The Company uses the "treasury stock" method
to determine the dilutive effect of common stock equivalents such as options, warrants and restricted stock. For the three and
six months ended June 30, 2019 and 2018, the Company incurred a net loss. Accordingly, the Company's common stock equivalents
were anti-dilutive and excluded from the diluted net loss per share computation. The aggregate number of potentially dilutive common stock equivalents outstanding at June 30, 2019 excluded
from the diluted net loss per share computation because their inclusion would be anti-dilutive were 1,216,096 which includes warrants
to purchase an aggregate of 663,356 shares of common stock and options to purchase an aggregate of 555,740 shares of common stock. The aggregate number of potentially dilutive
common stock equivalents outstanding at June 30, 2018 excluded from the diluted net loss per share computation because their inclusion
would be anti-dilutive were 1,439,942, which includes outstanding and exercisable warrants to purchase an aggregate of 821,202
shares of common stock, and vested stock options to purchase an aggregate of 618,740 shares of common stock. Income Taxes Income taxes are accounted for under the
asset and liability method in accordance with ASC 740, Accounting for Income Taxes For the three and six months ended June
30, 2019 and 2018, the Company did not recognize any interest or penalty expense related to income taxes. The Company files income
tax returns in the U.S. federal jurisdiction and in the states in which it does business. |
