| Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis
of Presentation The
consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”). The
Company previously had two During the fourth quarter
of 2021, the Company announced it would be winding down the Medical Devices Segment, which accounted for approximately 4% of revenue
in 2021 one Reverse
Stock Split On
March 1, 2021, the Company filed a Certificate of Amendment to its Certificate of Incorporation, as amended, with the Secretary of State
of the State of Delaware to effectuate a one-for-six (1:6) reverse stock split Principles
of Consolidation The
consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Activ Nutrititionals, Inc.,
VectorVision Ocular Health, Inc., NutriGuard Formulations, Inc., and Transcranial Doppler Solutions, Inc. All intercompany balances and
transactions have been eliminated in consolidation. Use
of Estimates The
preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”)
requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses,
and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. On an ongoing basis, management
reviews its estimates and if deemed appropriate, those estimates are adjusted. Significant estimates include those related to assumptions
used in valuing inventories at net realizable value, assumptions used in valuing assets acquired in business acquisitions, impairment
testing of goodwill and other long-term assets, assumptions used in valuing stock-based compensation, the valuation allowance for deferred
tax assets, accruals for potential liabilities, and assumptions used in the determination of the Company’s liquidity. Actual results
could differ from those estimates. Revenue
Recognition The
Company recognizes revenue in accordance with Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification
(“ASC”) Topic 606, Revenue from Contracts with Customers Revenue
and costs of sales are recognized when control of the products transfers to our customer, which generally occurs upon delivery to the
customer. The Company’s performance obligations are satisfied at that time. The Company does not have any significant contracts
with customers requiring performance beyond delivery, and contracts with customers contain no incentives or discounts that could cause
revenue to be allocated or adjusted over time. Shipping and handling activities are performed before the customer obtains control of
the goods and therefore represent a fulfillment activity rather than a promised service to the customer. All
products sold by the Company are distinct individual products and are offered for sale as finished goods only, and there are no performance
obligations required post-shipment for customers to derive the expected value from them. Contracts with customers contain no incentives
or discounts that could cause revenue to be allocated or adjusted over time. Shipping
and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity
rather than a promised service to the customer. Historically the Company has not experienced any significant payment delays from customers. In
certain circumstances, returns of products are allowed. A right of return does not represent a separate performance obligation, but because
customers are allowed to return products, the consideration to which the Company expects to be entitled is variable. Upon evaluation
of historical product returns, the Company determined it is probable that such returns will not cause a significant reversal of revenue
in the future. Due to the insignificant amount of historical returns, as well as the standalone nature of the Company’s products
and assessment of performance obligations and transaction pricing for the Company’s sales contracts, the Company does not currently
maintain a contract asset or liability balance at this time. The Company assesses its contracts and the reasonableness of its conclusions
on a quarterly basis. Revenue
by product: Schedule of Revenues by Product
2021 2020
Years Ended December 31,
2021 2020
Clinical Nutrition $ 6,952,359 $ 1,609,482
Diagnostics Equipment 280,758 275,862
Other - 4,500
Total revenue $ 7,233,118 $ 1,889,844 The
Company’s revenues earned during the year ended December 31, 2021, are derived primarily from retail customers in North America.
During the year ended December 31, 2020, our revenue was derived from retail customers in North America, plus a large sale to a single
Malaysian distributor in the amount of approximately $ 890,000 Revenues
by geographical areas: Schedule of Revenue by Geographical Area
2021 2020
Years Ended December 31,
2021 2020
North America $ 7,052,645 $ 891,768
Malaysia - 889,508
Other Asia 158,738 58,688
Europe and Other 21,735 49,880
Total revenue $ 7,233,118 $ 1,889,844 Cost
of Goods Sold Cost
of goods sold is comprised of the costs for third-party contract manufacturing, packaging, manufacturing fees, and in-bound freight charges. Third-party
outsourcing On
June 1, 2021, the Company completed the acquisition of Activ Nutritional LLC (see Note 3). Activ owns the Viactiv® line of supplement
chews for bone health, immune health and other applications. As part of the acquisition, the Company assumed third-party agreements for
the manufacture and product fulfillment of the Viactiv® products. Subsequent
to the acquisition of Activ, the Company derives substantially all of its revenue from the sale of products using a third-party fulfillment
center to provide order processing and sales fulfillment, customer invoicing and collections, and product warehousing. Fees for these
services are provided under a services and warehousing agreement based on 2% of the Company’s monthly gross invoiced sales, as
defined. The services and warehousing agreement automatically renews every six months unless either party provides notice of its intent
not to renew at least six months in advance. Substantially all of our products are shipped through the third-party fulfillment center
to the customer and the customer takes title to product and assumes risk and ownership of the product when it is delivered. Shipping
charges to customers are included in revenues. In
addition, the Company uses the third-party fulfillment center to provide sales and inventory management, and marketing and promotional
services. Fees for these services are provided under a sales representation agreement based on 4% of the Company’s monthly net
invoiced sales, as defined. The sales representation services and warehousing agreement automatically renews every three months unless
either party provides notice of its intent not to renew at least three months in advance. Subsequent
to the acquisition of Activ, the Company has outsourced the production of substantially all of its products with a third party that manufactures
and packages the finished products under a product supply agreement. The Company’s purchase price for each product includes costs
for raw materials, production, and amounts for fees and profit, as defined, for the manufacturer. For
the year ended December 31, 2021, costs incurred related to third-party outsourcing were: Schedule
of Cost of Revenue
Services and warehousing agreement $ 171,817
Sales representation agreement 301,031
Product supply agreement 2,925,781
Cost
of revenue $ 3,398,629 At
December 31, 2021, the Company recorded a receivable of $ 420,497 Shipping
Costs Shipping
costs associated with product distribution after manufacture are included as part of cost of goods sold. Shipping and handling expense
totaled $ 338,829 24,029 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 intangible 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. Cash Cash
consists of cash and demand deposits with banks. The Company holds no Investments Short-term
investments held by the Company as of December 31, 2021, consist of a U.S. Treasury Bill, which is classified as held-to-maturity. The
Company’s U.S. Treasury Bill is scheduled to mature approximately 30 days from the date of purchase. Unrealized gains and losses
were not material. As of December 31, 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 at the invoiced amounts. 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. At
December 31, 2021, the allowance for doubtful accounts was $ 20,695 no 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 years ended December 31, 2021 and 2020, the Company
wrote-down inventories of $ 179,222 971,719 Property
and Equipment Property
and equipment are recorded at cost less accumulated depreciation. Additions, improvements, and major renewals or replacements that substantially
extend the useful life of an asset are capitalized. Repairs and maintenance expenditures are expensed as incurred. Depreciation is computed
using the straight-line method over the estimated useful lives of the related assets, which range from three seven years Management
assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may
not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from
the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment
loss is recognized to write down the asset to its estimated fair value at that time. At December 31, 2021 and 2020, management determined
there were no impairments of the Company’s property and equipment. Intangible
Assets Amortizable
finite-lived identifiable intangible assets consist of a trade name and 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 At
December 31, 2021 and December 31, 2020, the Company had a trademark for $ 50,000 Goodwill The
Company tests goodwill for impairment annually on December 31, or more frequently if a triggering event occurs and it updates its test
with information that becomes available through the end of the period reported. Goodwill impairment exists when the fair value of goodwill
is less than its carrying value. The Company is its sole reporting unit. During the fourth quarter of 2021, the Company experienced a
sustained decrease in its share price, and as of December 31, 2021, the Company’s market capitalization was below the carrying
value of the Company’s net assets. Management concluded that this was an impairment triggering event, and concluded that there was
goodwill impairment of $ 11,893,134 No no Leases The
Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets represent the Company’s right
to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments
arising from the lease. Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present
value of unpaid lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available
at lease commencement in determining the present value of unpaid lease payments. Concentrations Revenue. 49 49 10 , Accounts
receivable 81 50 48 10 Purchases
from vendors 70 %
of all purchases. During the year ended December 31, 2020, the Company’s largest vendor accounted for approximately 38 %
of all purchases. No other vendor accounted for more than 10 %
of purchases during the years ended December 31, 2021 or 2020. Accounts
payable 46 18 13 10 Cash
balances. Cash balances are maintained at large, well-established financial institutions. At times, cash balances may exceed
federally insured limits. Insurance coverage limits are $ 250,000 Advertising
Costs Advertising
costs are expensed as incurred and are included in sales and marketing expense. Advertising costs aggregated approximately $ 161,833 44,429 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 Clinical Nutrition products. Research and development costs totaled
$ 64,358 160,978 Patent
Costs The
Company is the owner of four issued domestic patents, one granted patent in Canada, and one pending patent application in Hong Kong.
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 years ended December 31, 2021, and 2020, patent costs were approximately
$ 67,681 124,806 Stock-Based
Compensation The
Company periodically issues stock options and restricted stock awards to employees and non-employees in non-capital raising transactions
for services and for financing costs. Stock option grants, which are generally time or performance vested, are measured at the grant
date fair value and depending on the conditions associated with the vesting of the award, compensation cost is recognized 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 estimated using the Black-Scholes option-pricing model, which uses certain assumptions related
to risk-free interest rates, expected volatility, expected life, and future dividends. The assumptions used in the Black-Scholes option
pricing model could materially affect compensation expense recorded in future periods. Income
Taxes The
Company uses an asset and liability approach for accounting and reporting for income taxes that allows recognition and measurement of
deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach,
deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets
if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility
is uncertain. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. Loss
per Common Share Basic
loss per share is computed by dividing net loss by the weighted-average common shares outstanding during a period. Diluted earnings per
share is computed based on the weighted-average common shares outstanding plus the effect of dilutive potential common shares outstanding
during the period calculated using the treasury stock method. Dilutive potential common shares include shares from unexercised warrants
and options. Potential common share equivalents have been excluded where their inclusion would be anti-dilutive. The Company’s
basic and diluted net loss per share is the same for all periods presented because all shares issuable upon exercise of warrants and
options are anti-dilutive. The
following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share: Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share
2021 2020
December 31,
2021 2020
Warrants 485,067 2,132,758
Options 541,910 778,194
Unvested restricted common stock 202,671 30,000
Anti-dilutive securities
excluded from computation of earnings per share 1,229,648 2,940,952 Fair
Value of Financial Instruments Accounting
standards require certain assets and liabilities be 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 a hierarchy that prioritizes the inputs and valuation techniques used
to measure fair value: Level
1 – Level
2 – Level
3 – The
Company determines the level in the fair value hierarchy within which each fair value measurement falls in its entirety, based on the
lowest level input that is significant to the fair value measurement in its entirety. In determining the appropriate levels, the Company
performs an analysis of the assets and liabilities at each reporting period end. The
following table sets forth by level, within the fair value hierarchy, the Company’s assets and liabilities at fair value as of
December 31, 2021 and 2020: Schedule
of Assets and Liabilities at Fair Value
Level 1 Level 2 Level 3 Total
December 31, 2021
Level 1 Level 2 Level 3 Total
Assets
U.S. Treasury securities $ 4,995,623 $ - $ - $ 4,995,623
Total assets $ 4,995,623 $ - $ - $ 4,995,623
Liabilities $ - $ - $ - $ -
Total liabilities $ - $ - $ - $ -
Level 1 Level 2 Level 3 Total
December 31, 2020
Level 1 Level 2 Level 3 Total
Assets $ - $ - $ - $ -
Total assets $ - $ - $ - $ -
Liabilities
Warrant liability $ - $ 25,978 $ - $ 25,978
Total liabilities $ - $ 25,978 $ - $ 25,978 The
Company believes the carrying amount of its financial instruments (consisting of cash, accounts receivable, and accounts payable and
accrued liabilities) approximates fair value due to the short-term nature of such instruments. Recent
Accounting Pronouncements In
September 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)
2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“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, ASU 2016-13 will be effective for the Company beginning 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
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 recorded a derivative liability of $ 25,978 10,417 25,978 25,978 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 to have a material impact on the Company’s
present or future financial statements. |
