| 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 consolidated
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. On
May 31, 2024, the Company completed the sale of all of the outstanding equity interests of Activ (see Note 3). The operations of Activ
are reported as discontinued operations for all periods presented in the accompanying condensed consolidated financial statements. Principles
of Consolidation The
condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Viactiv Nutritionals,
Inc. and NutriGuard Formulations, Inc. Viactiv Nutritionals, Inc. was dissolved effective July 22, 2024. All intercompany balances and
transactions have been eliminated in consolidation. Segment
Information As
a result of the disposition of the Viactiv® brand and business effective May 31, 2024 (see Note 3), at June 30, 3024, the Company
operates and reports in one segment, which consists of the development and distribution of clinically supported dietary supplements for
ocular health. 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 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 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
June 30, 2024 and December 31, 2023, the allowance for doubtful accounts was $ 0 0 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, and warehousing, were $ 26,499 61,809 64,475 87,309 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 $ 7,572 8,972 17,616 22,175 Advertising
Costs Advertising
costs are expensed as incurred and are included in sales and marketing expense. Advertising costs were $ 0 400 0 1,657 Concentration
of Risk Vendor
costs three months ended June 30, 2024,
the Company utilized one vendor for its corporate legal advice. Costs associated with this vendor
accounted for approximately 48 and
approximately 31 42 . Accounts
payable 30, 2024 ,
three vendors accounted for 75 35 27 13 vendors
accounted for 81 55 14 12 and December 31, 2023. Cash
and cash equivalents. 14,822,826 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 antidilutive. The
following tables reconcile the number of shares of common stock utilized in the earnings per share calculations for the three months
and six months ended June 30, 2024 and 2023: Schedule
of Reconcile the Number of Shares of Common Stock Utilized in the Earnings Per Share
2024 2023
Three
Months Ended June 30,
2024 2023
Number of common shares - basic 1,284,156 1,267,340
Effect of dilutive securities:
Warrants 10,093 -
Options 3,390 430
Restricted
stock awards - 333
Number of common shares - diluted 1,297,638 1,268,103
Number of potentially
dilutive securities excluded from calculation due to antidilutive impact 88,240 1,549,074
2024 2023
Six
Months Ended June 30,
2024 2023
Number of common shares - basic 1,282,241 1,267,340
Effect of dilutive securities:
Warrants 4,669 693
Options 2,656
Restricted
stock awards - 333
Number of common shares - diluted 1,289,566 1,268,366
Number of potentially
dilutive securities excluded from calculation due to antidilutive impact 91,182 1,548,808 Antidilutive
securities include outstanding stock options with exercise prices and average unrecognized compensation cost more than the average fair
market value of common stock for the related period. Antidilutive securities also include restricted stock awards with average unrecognized
compensation cost in excess of the average fair market value of the common stock for the related period. Antidilutive options and restricted
stock awards were excluded from the calculation of diluted net income per share and could become dilutive in future periods. The
following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share:
2024 2023
June
30,
2024 2023
Warrants 73,261 1,526,301
Options 17,921 22,507
Anti-dilutive securities 91,182 1,548,808 Fair
Value of Financial Instruments Accounting
standards require certain assets and liabilities to be reported at fair value in 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,
2024 and December 31, 2023: Schedule
of Assets and Liabilities at Fair Value
Level 1 Level 2 Level 3 Total
June
30, 2024
Level
1 Level
2 Level
3 Total
Assets $ - $ - $ - $ -
Total assets $ - $ - $ - $ -
Liabilities
Warrant derivative liability $ - $ - $ 631,254 $ 631,254
Total liabilities $ - $ - $ 631,254 $ 631,254
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 six months ended June 30, 2024: Schedule
of Warrant Derivative Liability Measured at Fair Value
Six Months Ended June 30, 2024
Balance as of beginning of period
– December 31, 2023 $ 2,453,100
Change in fair value of warrant derivative
liability 3,817,908
Fair value of warrants redeemed for cash
settlement (5,632,429 )
Fair value of warrant
redemption payable (7,325 )
Balance as of end
of period – June 30, 2024 $ 631,254 As
of June 30, 2024 and December 31, 2023, the Company’s outstanding warrants (except for placement agent 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
July 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-03,
Presentation of Financial Statements (Topic 205), Income Statement — Reporting Comprehensive Income (Topic 220), Distinguishing
Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation — Stock Compensation (Topic 718) Presentation of Financial
Statements (“ASU 2023-03”). ASU 2023-03 amends the FASB Accounting Standards Codification to include Amendments to SEC Paragraphs
pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and SEC Staff Accounting
Bulletin Topic 6.B, Accounting Series Release 280 — General Revision of Regulation S-X: Income or Loss Applicable to Common Stock.
As ASU 2023-03 did not provide any new guidance, there was no transition or effective date associated with its adoption. Accordingly,
the Company adopted ASU 2023-03 immediately upon its issuance. The adoption of ASU 2023-03 did not have any impact on the Company’s
consolidated financial statements, including their presentation and related disclosures. In
November 2023, the FASB issued 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.The adoption of ASU 2023-07 did not have any impact on the Company’s consolidated financial statements, including
their presentation and related disclosures. 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
consolidated financial statements. |
