| Summary of Significant Accounting Policies | Note
2 - Summary of Significant Accounting Policies Use
of Estimates The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts and classification of assets and liabilities, disclosure of contingent assets and liabilities at the date
of the financial statements and reported amounts of revenues and expenses during the reporting period. The significant estimates
in the Company’s financial statements include the valuation of preferred stock, common stock and related warrants, and other
stock-based awards. Actual results could differ from such estimates. Reclassifications Certain
prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no material
impact on net earnings, financial position or cash flows. Accounts
Receivable Accounts
receivable consist primarily of trade receivables. The Company provides an allowance for doubtful trade receivables equal to the
estimated uncollectible amounts. That estimate is based on historical collection experience, current economic and market conditions
and a review of the current status of each customer’s trade accounts receivable. The allowance for doubtful trade receivables
was less than $1 at June 30, 2019 and at December 31, 2018. Inventories Inventories
are stated at the lower of cost or market value, using the first-in, first-out convention. Inventories consist of raw materials,
work in progress and finished goods. Components
of inventory are:
June
30, December
31,
2019 2018
Raw
materials $ 1,071 $ 1,111
Work
in progress 4 —
Finished
goods 260 154
Total
inventory 1,335 1,265
Less:
Reserve
for obsolete (4 ) (4 )
Total
net inventory $ 1,331 $ 1,261 Prepaid
Expenses Prepaid
expenses consist primarily of payments made for director and officer insurance, director compensation, rent, legal and inventory
purchase deposits and seminar fees to be expensed in the current year. Property
and Equipment Property
and equipment are stated at cost less accumulated depreciation. Equipment held under capital leases are stated at the present
value of minimum lease payments less accumulated amortization. Depreciation
on property and equipment is computed using the straight-line method over the estimated useful lives of the respective assets.
The cost of leasehold improvements is amortized over the life of the improvement or the term of the lease, whichever is shorter.
Equipment held under capital leases is amortized over the shorter of the lease term or estimated useful life of the asset. The
Company incurs repair and maintenance costs on its major equipment, which are expensed as incurred. Impairment
of Long-Lived Assets Long-lived
assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. If circumstances require long-lived assets or asset groups to be tested
for possible impairment, the Company compares the undiscounted cash flows expected to be generated from the use of the asset or
asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted
cash flow basis, an impairment charge is recognized to the extent that the carrying amount exceeds its fair value. Fair value
is determined through various valuation techniques, such as discounted cash flow models and the use of third-party independent
appraisals. The Company has not recorded an impairment of long-lived assets since its inception. Revenue
Recognition Effective
January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Revenue Recognition. Revenue Recognition The
Company recognizes revenue when it leaves their dock at a fixed selling price and payment terms of 30 to 120 days from invoicing.
The Company recognizes other revenue earned from pilot studies upon the performance of specific services under the respective
service contract. The
Company derives revenue primarily from commercial sales of products. Research
and Development Research
and development costs are expensed as incurred. Research and development expenses primarily consist of salaries and benefits for
research and development employees, stock-based compensation, consulting fees, lab supplies, costs incurred related to conducting
scientific trials and field studies, and regulatory compliance costs. Also, included in research and development expenses is an
allocation of facilities related costs, including depreciation of research and development equipment. Stock-based
Compensation Employee
stock-based awards, consisting of restricted stock units and stock options expected to be settled in shares of the Company’s
common stock, are recorded as equity awards. The grant date fair value of stock options is measured using the Black-Scholes option
pricing model. The Company expenses the grant date fair value of its stock options on a straight-line basis over their respective
vesting periods. Performance-based awards are expensed over the performance period when the related performance goals are probable
of being achieved. For
equity instruments issued to non-employees, the stock-based consideration is measured using a fair value method. The measurement
of the stock-based compensation is subject to re-measurement as the underlying equity instruments vest. The
stock-based compensation expense recorded for the three and six months ended June 30, 2019 and 2018, is as follows:
Three
Months Ended Six
Months Ended
2019 2018 2019 2018
Research
and development $ 1 $ 29 $ 10 $ 58
General
and administrative 218 2,008 461 2,677
Total
stock-based compensation expense $ 219 $ 2,037 $ 471 $ 2,735 See
Note 11 for additional discussion on stock-based compensation. Income
Taxes Company
accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred
tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and
liabilities and net operating loss carryforwards using enacted tax rates in effect for the year in which the differences are expected
to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes
the enactment date. The
Company records net deferred tax assets to the extent it believes these assets will more likely than not be realized. These deferred
tax assets are subject to periodic assessments as to recoverability and if it is determined that it is more likely than not that
the benefits will not be realized, valuation allowances are recorded which would increase the provision for income taxes. In making
such determination, the Company considers all available positive and negative evidence, including future reversals of existing
taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. The Company
currently maintains a full allowance against its deferred tax assets. The
Company applies a more-likely-than-not recognition threshold for all tax uncertainties. Only those benefits that have a greater
than fifty percent likelihood of being sustained upon examination by the taxing authorities are recognized. Based on its evaluation,
the Company has concluded there are no significant uncertain tax positions requiring recognition in its financial statements. The
Company recognizes interest and/or penalties related to uncertain tax positions in income tax expense. There are no uncertain
tax positions as of June 30, 2019 or December 31, 2018 and as such, no interest or penalties were recorded in income tax expense. Comprehensive
Loss Net
loss and comprehensive loss were the same for all periods presented; therefore, a separate statement of comprehensive loss is
not included in the accompanying financial statements. Loss
Per Share Attributable to Common Stockholders Basic
loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders
by the weighted average number of common shares outstanding during the period. Diluted loss per share attributable to common stockholders
is computed by dividing the loss attributable to common stockholders by the weighted average number of common shares and potentially
dilutive securities outstanding for the period determined using the treasury stock and if-converted methods. For purposes of the
computation of diluted loss per share attributable to common stockholders, common stock purchase warrants, and common stock options
are considered to be potentially dilutive securities but have been excluded from the calculation of diluted loss per share attributable
to common stockholders because their effect would be anti-dilutive given the net loss reported for the three and six months ended
June 30, 2019 and 2018. Therefore, basic and diluted loss per share attributable to common stockholders are the same for each
period presented. The
following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted
loss per share attributable to common stockholders (in common stock equivalent shares):
June
30,
2019 2018
Common
stock purchase warrants 9,621,125 6,090,035
Restricted stock unit 117,465 209,579
Common
stock options 2,435,177 1,719,771
Total 12,173,767 8,019,385 Adoption
of New Accounting Standards :
In
May 2014 the FASB issued ASU 2014-09, Revenue from Contracts with Customers “Revenue from Contracts with Customers” Revenue Recognition In
January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In
February 2016, the FASB issued ASU 2016-02, Leases On
January 1, 2019, the Company adopted the new leasing standard and all related amendments. The Company elected the optional transition
method provided by the FASB in ASU 2018-11, Leases (Topic 842): Targeted Improvements The
standard did not have a material impact on the Company’s Condensed Consolidated Statements of Comprehensive Income. The
cumulative effect of the changes made to the Company’s Consolidated Balance Sheet as of January 1, 2019 for the adoption
of the new leasing standard was as follows:
Balance
Adjustment
Due to ASC 842 Balance
Right to
Use Asset - Long Term — $ 87 $ 87
Lease Liability –
Long Term — $ (87 ) $ (87 ) At
June 30, 2019, the balance remaining in Right to Use Asset-Long Term and Lease Liability-Long Term was $65,000 and ($65,000) respectively. The
Company determines if an arrangement is a lease at lease inception. Operating lease right-of-use (ROU) assets and operating lease
liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement
date. As most of the Company’s lease contracts do not include an implicit rate, the Company uses its incremental borrowing
rate based on information available at commencement date in determining the present value of future payments. The incremental
borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in
economic environments where the leased asset is located. The operating lease ROU asset also includes any initial direct costs
and lease payments made prior to lease commencement and excludes lease incentives incurred. The
Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise
that option. Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The
Company has certain lease agreements that contain both lease and non-lease components, which it has elected to account for as
a single lease component for all asset classes. See
Note 12, Commitments and Contingencies, for future minimum lease payments and maturities. Accounting
Standards Issued but Not Yet Adopted In
August 2018, the FASB issued authoritative guidance intended to address a customer’s accounting for implementation costs
incurred in a cloud computing arrangement that is a service contract. This guidance aligns the requirements for capitalizing implementation
costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs
incurred to develop or obtain internal-use software. The guidance also requires presentation of the capitalized implementation
costs in the statement of financial position and in the statement of cash flows in the same line item that a prepayment for the
fees of the associated hosting arrangement would be presented, and the expense related to the capitalized implementation costs
to be presented in the same line item in the statement of operations as the fees associated with the hosting element (service)
of the arrangement. This guidance is effective for annual periods beginning after December 15, 2019, including interim periods
within those annual periods, with early adoption permitted. We are currently evaluating the potential impact on our financial
position, results of operations and statement of cash flows upon adoption of this guidance, which will result in the change in
presentation of capitalized implementation costs related to hosting arrangements from properties to other assets on the consolidated
balance sheet, as well as the expense related to such costs no longer being classified as depreciation expense and cash flows
related to those costs no longer being presented as investing activities. Other
than the items noted above, there have been no new accounting pronouncements not yet effective or adopted in the current year
that we believe have a significant impact, or potential significant impact, to our unaudited condensed consolidated interim financial
statements. |
