Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company transactions and balances have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures have been condensed or omitted pursuant to the rules and regulations of the SEC. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes for the fiscal year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 31, 2022. The condensed consolidated balance sheet as of December 31, 2021, was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including notes, required by GAAP. The Company’s unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual financial statements for the year ended December 31, 2021 and, in the opinion of management, reflect all adjustments, which include normal recurring adjustments, necessary for a fair presentation of the periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2022. For the year ended December 31, 2021, management concluded that the Company had one operating and reporting segment made up of its clinical nutrition business, and management changed the Company’s reportable segments to align with these revisions to the Company’s internal reporting structure. The Company previously had two reportable segments, which included a clinical nutrition segment and a medical devices segment. At June 30 , 2022 and December 31, 2021, as there was only one Reverse Stock Split On March 1, 2021, the Company effectuated a one-for-six (1:6) reverse stock split Use of Estimates The preparation of our financial statements in conformity with 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. 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 materially from those estimates. Revenue Recognition In accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, Historically, the Company has not experienced any significant payment delays from customers. Due to the insignificant amount of historical returns, as well as the standalone nature of the Company’s products, and the 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. Revenues by geographical area are as follows: Schedule of Revenue by Geographical Area 2022 2021 2022 2021 Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 North America $ 3,275,213 $ 1,176,608 $ 5,640,933 $ 1,348,748 Asia - 29,787 - 88,049 Europe and other - 17,325 18,899 20,220 Total revenue $ 3,275,213 $ 1,223,720 $ 5,659,832 $ 1,457,017 Third-Party Outsourcing 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. Substantially all of the Company’s products are shipped through the third-party fulfillment center to the customer. 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. The Company outsources the production of substantially all of its products with a third party that manufactures and packages the finished products under a product supply agreement. For the three months and six months ended June 30, 2022 and 2021, costs incurred related to third-party outsourcing which includes manufacturing, order processing and fulfillment, customer invoicing, collections and warehousing, were approximately $ 1,847,000 3,075,000 719,000 719,000 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. Shipping Costs Shipping costs associated with product distribution after manufacture are included as part of cost of goods sold. Shipping and handling expense totaled $ 252,883 77,942 412,374 95,416 Advertising Costs Advertising costs are expensed as incurred and are included in sales and marketing expense. Advertising costs were $ 292,368 253,428 879,730 611,491 Concentrations Revenue. 56 39 13 10 , During the six months ended June 30, 2022, the Company had one customer that accounted for 57 33 11 10 , Accounts receivable June 30, 2022 , the Company had accounts receivable from one customer which comprised approximately 61 , the Company had accounts receivable from two customers which comprised approximately 50 48 10 and December 31, 2021. Historically we have not experienced any collectability issues with this customer. Purchases from vendors three months and six months ended June 30, 2022 , the Company utilized one manufacturer for most of its production and packaging of its clinical nutrition products. Total purchases from this manufacturer accounted for approximately 43 , 2022 that accounted for 13 , the Company’s largest vendor accounted for approximately 38 16 15 10 and 2021. Accounts payable June 30, 2022 , one vendor accounted for 87 the Company’s largest two vendors accounted for 18 13 10 and December 31, 2021. 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 and/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 accounted for 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. Loss per Common Share Basic loss per share is computed by dividing net loss by the weighted-average common shares outstanding during the period, excluding shares of unvested restricted common stock outstanding. 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. Shares of vested restricted stock are included in the diluted weighted average number of common shares outstanding from the date they are vested. 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 as the Company had a net loss for all periods presented and all shares issuable upon exercise of warrants and options would therefore be 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 2022 2021 June 30, 2022 2021 Warrants 74,485,067 485,067 Options 831,738 978,087 Unvested restricted common stock 33,333 - Anti-dilutive securities excluded from computation of earnings per share 75,350,138 1,463,154 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 the sale of an asset or paid to transfer a liability in an orderly transaction between market participants on 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 financial assets at fair value as of June 30, 2022 and December 31, 2021: Schedule of Financial Assets at Fair Value Level 1 Level 2 Level 3 Total June 30, 2022 Level 1 Level 2 Level 3 Total Assets U.S. Treasury securities $ 10,006,758 $ - $ - $ 10,006,758 Total assets $ 10,006,758 $ - $ - $ 10,006,758 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 The Company believes the carrying amount of its financial instruments (consisting of cash, short-term investments, accounts receivable, accounts payable and accrued liabilities) approximates fair value due to the short-term nature of such instruments. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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) . At December 31, 2020, the Company recorded a derivative liability of $ 26,265 10,417 26,265 26,265 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 Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Credit Losses – Measurement of Credit Losses on Financial Instruments Other recent accounting pronouncements issued by FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements. |