| Summary of Significant Accounting Policies | 2.
Summary of Significant Accounting Policies Basis
of Presentation The
unaudited condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the
United States of America (“GAAP”) pursuant to the applicable rules and regulations of the SEC for interim financial information. The 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, 2023 and, in the opinion of management,
reflect all adjustments, which consist of normal recurring adjustments, considered 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, 2024. These unaudited condensed consolidated financial statements should be read in conjunction
with the Company’s audited consolidated financial statements and accompanying notes included in the Company’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC. The condensed consolidated balance sheet as of December
31, 2023 was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including
notes, required by GAAP. Principles
of Consolidation The
unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Viactiv Nutritionals,
Inc. and NutriGuard Formulations, Inc. All intercompany balances and transactions have been eliminated in consolidation. Segment
Information The
Company operates and reports in one segment, which consists of the development and distribution of clinically supported dietary supplements.
The Company’s operating segment is reported in a manner consistent with the internal reporting provided to the Company’s
Chief Operating Decision Maker, which is the Company’s President and Chief Executive Officer. Use
of Estimates The
preparation of the Company’s 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.
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 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 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. Historically
the Company has not experienced any significant payment delays from customers. In
certain circumstances, returns of products are allowed. Due to the insignificant amount of historical returns, the stand-alone nature
of our products, and our assessment of performance obligations and transaction pricing for our sales contracts the Company does not currently
maintain a contract asset or liability balance for obligations. The Company assesses its contracts and the reasonableness of our conclusions
on a quarterly basis. At
March 31, 2024 and December 31, 2023, the allowance for doubtful accounts was $ 0 1,840 Revenue
by product: Schedule of Revenues by Product
2024 2023
Three Months Ended March 31,
2024 2023
Nutritional supplements $ 2,918,526 $ 3,091,447
Ocular products 81,119 94,242
Revenue
by product $ 2,999,645 $ 3,185,689 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 certain 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. Costs
incurred related to third-party outsourcing, which includes manufacturing, order processing and fulfillment, customer invoicing, collections
and warehousing, were approximately $ 1,509,600 1,937,000 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 $ 102,435 146,820 Advertising
Costs Advertising
costs are expensed as incurred and are included in sales and marketing expense. Advertising costs were $ 337,364 479,866 Concentrations Revenue.
72 46 26 80 59 11 10 10 Accounts
receivable March 31, 2024 ,
the Company had accounts receivable from two customers which comprised approximately 81 61 20 ,
the Company had accounts receivable from one customer which comprised approximately 57 18 10 and December 31, 2023. Purchases
from vendors three months ended March
31, 2024 and 2023 , the Company utilized one manufacturer for most of its production and packaging
of its dietary supplement products. Total purchases from this manufacturer accounted for approximately 40 and approximately 49 10 13 10 . Accounts
payable March 31, 2024 ,
two vendors accounted for 82 72 10 one vendor accounted for 91 10 and
December 31, 2023. Cash
and cash equivalents. 5,605,035 The
Company routinely has cash balances in financial institutions in excess of the FDIC and SIPC insurance limits of $ 250,000 500,000 Stock-Based
Compensation Stock-based
awards for stock options and restricted stock awards to employees and non-employees are accounted for using the fair value method in
accordance with ASC 718, Compensation – Stock Compensation. The estimated fair value of stock options granted to employees in exchange
for services is measured at the grant date, using a fair value-based method, such as a Black-Scholes option valuation model, and is recognized
as an expense on a straight-line basis over the requisite service periods. The assumptions used in the Black-Scholes option pricing model
such as risk-free interest rates, expected volatility,
expected life, and future dividends could materially affect compensation expense recorded in future
periods. The fair value of restricted stock units is measured at the grant date based on the closing market price of the Company’s
common stock on the date of grant and is recognized as an expense on a straight-line basis over the requisite service periods. 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. Income
(Loss) per Common Share Basic
income (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 experienced a net loss for the three months ended March
31, 2024 and net income for the three months ended March 31, 2023. Although the Company reported net income for the three months ended
March 31, 2023, using the treasury stock method for the period from January 1, 2023 to the redemption of the preferred stock on February
8, 2023, under the most advantageous pricing approach, there was no material change to the diluted net income per share as reported. 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
2024 2023
March 31,
2024 2023
Warrants 736,438 1,526,701
Options 20,577 12,459
Unvested restricted common stock 333 667
Anti-dilutive securities 757,348 1,539,827 Fair
Value of Financial Instruments Accounting
standards require certain assets and liabilities to 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 March
31, 2024 and December 31, 2023: Schedule of Assets and Liabilities at Fair Value
Level 1 Level 2 Level 3 Total
March 31, 2024
Level 1 Level 2 Level 3 Total
Assets $ - $ - $ - $ -
Total assets $ - $ - $ - $ -
Liabilities
Warrant derivative liability $ - $ - $ 5,721,688 $ 5,721,688
Total liabilities $ - $ - $ 5,721,688 $ 5,721,688
Level 1 Level 2 Level 3 Total
December 31, 2023
Level 1 Level 2 Level 3 Total
Assets $ - $ - $ - $ -
Total assets $ - $ - $ - $ -
Liabilities
Warrant derivative liability $ - $ - $ 2,453,100 $ 2,453,100
Total liabilities $ - $ - $ 2,453,100 $ 2,453,100 The
following table provides a roll-forward of the warrant derivative liability measured at fair value on a recurring basis using unobservable
level 3 inputs for the three months ended March 31, 2024 as follows: Schedule of Warrant Derivative Liability Measured at Fair Value
March 31, 2024
Balance as of beginning of period – December 31, 2023 $ 2,453,100
Change in fair value of warrant derivative liability 3,268,588
Balance as of end of period – March 31, 2024 $ 5,721,688 As
of March 31, 2024 and December 31, 2023, the Company’s outstanding warrants were treated as derivative liabilities and changes
in the fair value were recognized in the statement of operations (see Note 5). The
Company believes the carrying amounts of certain financial instruments, including cash, accounts receivable, and accounts payable and
accrued liabilities, approximate fair value due to the short-term nature of such instruments and are excluded from the fair value tables
above. Recent
Accounting Pronouncements In
November 2023, the Financial Accounting Standards board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure (“ASU 2023-07”), which is intended to improve
reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expense categories that
are regularly provided to the chief operating decision maker and included in each reported measure of a segment’s profit or loss.
ASU-2023-07 also requires all annual disclosures about a reportable segment’s profit or loss and assets to be provided in interim
periods and for entities with a single reportable segment to provide all the disclosures required by ASC 280, Segment Reporting, including
the significant segment expense disclosures. The Company adopted ASU 2023-07 effective January 1, 2024, and there was no material impact
on the Company’s financial position, results of operations and cash flows. Other
recent accounting pronouncements and guidance 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. |
