Significant Accounting Policies (Policies)

9 Months Ended

12 Months Ended

Sep. 30, 2018

Dec. 31, 2017

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Nature of Operations and Continuance of Operations

Precision Therapeutics Inc., (the “Company”) was originally incorporated on

April 23, 2002

in Minnesota as BioDrain Medical, Inc. Effective

August 6, 2013,

the Company changed its name to Skyline Medical Inc. Pursuant to an Agreement and Plan of Merger effective

December 16, 2013,

the Company merged with and into a Delaware corporation with the same name that was its wholly-owned subsidiary, with such Delaware corporation as the surviving corporation of the merger. On

August 31, 2015,

the Company completed a successful offering and concurrent uplisting to the NASDAQ Capital Market. On

February 1, 2018,

the Company filed with the Secretary of State of Delaware a Certificate of Amendment to its Certificate of Incorporation to change the corporate name from Skyline Medical Inc. to Precision Therapeutics Inc., effective

February 1, 2018.

Because of this change, the Company’s common stock trades under the new ticker symbol “AIPT,” effective

February 2, 2018.

Skyline Medical (“Skyline”) remains as an incorporated division of Precision Therapeutics Inc.

As of

September 30, 2018,

the Company had

13,398,339

shares of common stock outstanding, par value

$.01

per share. The Company is a healthcare company that provides personalized medicine solution and medical devices in

two

main areas: (

) precision medicine, which aims to apply artificial intelligence to personalized medicine and drug discovery; and (

) the Company has developed an environmentally safe system for the collection and disposal of infectious fluids that result from surgical procedures and post-operative care. The Company also makes ongoing sales of proprietary cleaning fluid and filters to users of its systems. In

April 2009,

the Company received

510

(k) clearance from the Food & Drug Administration (the “FDA”) to authorize the Company to market and sell its STREAMWAY System products.

The Company acquired

25%

of the capital stock of Helomics Holding Corporation (“Helomics”), in transactions in the

first

quarter of

2018,

and in

April 2018

the Company entered into a letter of intent for a proposed merger transaction to acquire the remaining ownership of Helomics. In

June 2018,

the Company and Helomics entered into a definitive merger agreement – see Note

The Company’s precision medicine services – designed to use artificial intelligence and a comprehensive disease database to improve the effectiveness of cancer therapy – were launched with the Company’s investment in Helomics. Helomics’ precision oncology services are based on its D-CHIP™ diagnostic platform, which combines a database of genomic and drug response profiles from over

149,000

tumors with an artificial intelligence based searchable bioinformatics platform. Once a patient’s tumor is excised and analyzed, the D-CHIP platform compares the tumor profile with its database, and using its extensive drug response data, provides a specific therapeutic roadmap. In addition, the Company has formed a wholly-owned subsidiary, TumorGenesis Inc., to develop the next generation, patient derived tumor models for precision cancer therapy and drug development. TumorGenesis Inc., formed during the

first

quarter of

2018,

is presented as part of the condensed consolidated financial statements (“financial statements”).

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred recurring losses from operations and has an accumulated deficit of

$61,405,345.

The Company does

not

expect to generate sufficient operating revenue to sustain its operations in the near-term. The Company had cash and cash equivalents of

$209,891

as of

September 30, 2018

and needs to raise significant additional capital to meet its operating needs, and therefore there is substantial doubt about the Company’s ability to continue as a going concern for

one

year after the date that the financial statements are issued. The financial statements do

not

include any adjustments that might result from the outcome of this uncertainty. The Company raised

$1,815,000,

net, from a bridge loan executed on

September 28, 2018.

Neither the cash nor the stock transferred until the

first

week in

October 2018

and is reported in the balance sheet as a loan receivable and note payable. Warrants accompanied the agreement with a grant date of

September 28, 2018

and are included in the outstanding stock option and warrant lists.

Since inception to

September 30, 2018,

the Company has raised approximately

$36,490,000

in equity offerings, inclusive of (

)

$2,055,000

from a private placement of Series A Convertible Preferred Stock, (

)

$13,555,003

from the public offering of Units, (

)

$1,739,770

from a registered direct offering, (

)

$3,937,500

plus an overallotment of

$358,312

from a firm commitment underwritten public offering, and (

)

$1,300,000

from a private placement of Series C Convertible Preferred Stock. Also included in the

$36,490,000

aggregate is a total of

$3,405,052

from

2018

including

$2,755,000

from a firm commitment underwritten public offering and

$650,062

from exercising warrants into common stock. In addition, historically there was

$5,685,000

in debt financing.

Nature of Operations and Continuance of Operations

The Company was originally incorporated on

April 23, 2002

in Minnesota as BioDrain Medical, Inc. Effective

August 6, 2013,

the Company changed its name to Skyline Medical Inc. Pursuant to an Agreement and Plan of Merger effective

December 16, 2013,

the Company merged with and into a Delaware corporation with the same name that was its wholly-owned subsidiary, with such Delaware Corporation as the surviving corporation of the merger. On

August 31, 2015,

the Company completed a successful offering and concurrent uplisting to The NASDAQ Capital Market. On

February 1, 2018,

we filed with the Secretary of State of Delaware a Certificate of Amendment to our Certificate of Incorporation to change our corporate name from Skyline Medical Inc. to Precision Therapeutics Inc., effective

February 1, 2018.

Because of this change, our common stock trades under the new ticker symbol “AIPT,” effective

February 2, 2018.

Skyline Medical (“Skyline”) remains as an incorporated division of Precision Therapeutics Inc.

As of

December 31, 2017,

the registrant had

6,943,283

shares of common stock, par value

$.01

per share, outstanding, adjusted for a

-for-

reverse stock split effective

October 27, 2016.

In this Report, all numbers of shares and per share amounts, as appropriate, have been stated to reflect the reverse stock split. The Company has developed an environmentally safe system for the collection and disposal of infectious fluids that result from surgical procedures and post-operative care. The Company also makes ongoing sales of our proprietary cleaning fluid and filters to users of our systems. In

April 2009,

the Company received

510

(k) clearance from the FDA to authorize the Company to market and sell its STREAMWAY System products.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has suffered recurring losses from operations and had a stockholders’ deficit until

August 31, 2015

whereupon the Company closed its public offering of units of common stock, Series B Convertible Preferred Stock and Series A Warrants (the “Units”). There remains though, substantial doubt about its ability to continue as a going concern. The financial statements do

not

include any adjustments that might result from the outcome of this uncertainty.

Since inception to

December 31, 2017,

the Company raised approximately

$29,065,934

in equity, inclusive of

$2,055,000

from a private placement of Series A Convertible Preferred Stock,

$13,555,003

from the public offering of Units,

$1,739,770

from a registered direct offering,

$3,937,500

plus an overallotment of

$358,312

from a firm commitment underwritten public offering,

$1,300,000

from a private placement of Series C Convertible Preferred Stock, and

$5,685,000

in debt financing. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.”

Interim Financial Statements, Policy [Policy Text Block]

Interim Financial Statements

The Company has prepared the unaudited interim financial statements and related unaudited financial information in the footnotes in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. These interim financial statements reflect all adjustments consisting of normal recurring accruals, which in the opinion of management, are necessary to present fairly the Company’s position, the results of its operations and its cash flows for the interim periods. These interim financial statements reflect all intercompany eliminations. These interim financial statements should be read in conjunction with the annual financial statements and the notes thereto contained in the Form

-K filed with the SEC on

April 2, 2018.

The nature of the Company’s business is such that the results of any interim period

may

not

be indicative of the results to be expected for the entire year.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Developments

May 2014,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

No.

2014

09,

Revenue from Contracts with Customers (Topic

606

which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The standard’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted the standard on

January 1, 2018

using the modified retrospective method applied to those contracts which were

not

completed as of

December 31, 2017.

Results for reporting periods beginning after

January

2018

are presented under Topic

606,

while prior-period amounts have

not

been retrospectively adjusted and continue to be reported in accordance with Topic

605,

Revenue Recognition

. Based upon the Company’s contracts which were

not

completed as of

December 31, 2017,

the Company was

not

required to make an adjustment to the opening balance of retained earnings as of

January 1, 2018,

and there was

material impact. See Note

for further discussion.

January 2016,

the FASB issued ASU

No.

2016

01,

Financial Instruments-Overall (Subtopic

825

): Recognition and Measurement of Financial Assets and Financial Liabilities

(“ASU

2016

01”

). The standard changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. Under the new guidance, entities will be required to measure equity investments that do

not

result in consolidation and are

not

accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicability exception. The Company adopted the standard as of

January 1, 2018.

As of

June 30, 2018,

there is

material impact on the Company’s financial statements and disclosures.

February 2016,

the FASB issued ASU

No.

2016

02,

“

Leases (Topic

842

)

” (“ASU

2016

02”

), which requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The standard states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The standard is effective for fiscal years and interim periods within those fiscal years beginning after

December 15, 2018.

Early adoption is permitted. The Company believes that upon adoption, ASU

2016

will

not

have a material impact on the Company’s balance sheet, results of operations, equity or cash flows. Further, the Company is continuing to assess any incremental disclosures that will be required in our consolidated financial statements.

Recent Accounting Developments

May 2014,

the Financial Accounting Standards Board (“FASB”) issued ASU

2014

09,

Revenue from Contracts with Customers

and created a new topic in the FASB Accounting Standards Codification ("ASC"), Topic

606,

and has since amended the standard with ASU

2015

14,

“Revenue from Contracts with Customers: Deferral of the Effective Date,”

ASU

2016

08,

“Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net),”

ASU

2016

10,

“Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing,”

ASU

2016

12,

“Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients.”

ASU

2017

13.

These new standards provide a single comprehensive revenue recognition framework for all entities and supersedes nearly all existing U.S. GAAP revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is designed to create greater comparability for financial statement users across industries and also requires enhanced disclosures. The amendments are effective for annual reporting periods beginning after

December 15, 2017,

including interim periods within that reporting period. Early application is

not

permitted. The FASB allows

two

adoption methods under ASC

606.

We adopted the standard on

January 1, 2018

using the “modified retrospective method.” Under that method, we will apply the rules to all contracts existing as of

January 1, 2018,

recognizing in the beginning retained earnings an adjustment for the cumulative effect of the change and providing additional disclosure comparing results to previous accounting standards. While we continue to assess all potential impacts of the standard, it is currently anticipated that the standard will

not

have a material impact on our financial statements.

August 2014,

the FASB issued ASU

2014

15,

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

. The new standard requires management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. The standard is effective for public entities for annual and interim periods beginning after

December 15, 2016,

with early adoption permitted. We implemented in the

first

quarter of

2017.

July 2015,

the FASB issued ASU

No.

2015

, Inventory (Topic

330

): Simplifying the Measurement of Inventory

, requiring that inventory be measured at the lower of cost and net realizable value. Net realizable value is defined as estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This ASU is effective within annual periods beginning on or after

December

15,

2016,

including interim periods within that reporting period. We implemented in the

first

quarter of

2017.

November 2015,

the FASB issued ASU

2015

17,

“Income Taxes (Topic

740

)”

providing guidance on the balance sheet classification of deferred taxes. The guidance requires that deferred tax assets and liabilities to be classified as noncurrent in the Balance Sheet. The guidance is effective for fiscal years beginning after

December 15, 2016

and for interim periods within those fiscal years, with early adoption permitted. We implemented in the

first

quarter of

2017.

January 2016,

the FASB issued ASU

No.

2016

01,

Financial Instruments-Overall (Subtopic

825

): Recognition and Measurement of Financial Assets and Financial Liabilities

(“ASU

2016

01”

not

result in consolidation and are

not

December 15, 2017,

including interim periods within those fiscal years. The Company does

not

believe that the adoption of this guidance will have a material impact on the Company’s financial statements and disclosures.

February 2016,

the FASB issued ASU

No.

2016

02,

“Leases

(Topic

842”

(“ASU

2016

02”

December 15, 2018.

Early adoption is permitted. We are currently evaluating the timing of our adoption and the impact that the updated standard will have on our financial statements.

March 2016,

the FASB issued ASU

No.

2016

09,

“Compensation (Topic

718

): Improvements to Employee Shares-Based Payment Accounting”

(

“ASU2016

09”

). ASU

2016

simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard is effective for fiscal years and interim periods within those fiscal years beginning after

December 15, 2016.

Early adoption is permitted. We implemented in the

first

quarter of

2017.

August 2016,

the FASB issued ASU

No.

2016

15,

Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments,

to address diversity in how certain cash receipts and cash payments are presented and classified in the statements of cash flows. The amendments are effective for public business entities for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years. The amendments should be applied using a retrospective transition method to each period presented. If retrospective application is impractical for some of the issues addressed by the update, the amendments for those issues would be applied prospectively as of the earliest date practicable. Early adoption is permitted, including adoption in an interim period. The Company does

not

expect the adoption of ASU

2016

to have a material impact on its financial statements.

December 22, 2017,

the Tax Cuts and Jobs Act of

2017

(Tax Reform Act) was signed into law making significant changes to the Internal Revenue Code. Changes include a reduction in the corporate tax rates, changes to operating loss carry-forwards and carrybacks, and a repeal of the corporate alternative minimum tax. The legislation reduces the U.S. corporate income tax rates from

34%

21%.

As a result of the enacted law, the Company is required to revalue its deferred tax assets and liabilities at the new enacted rate.

We reviewed all other significant newly issued accounting pronouncements and determined they are either

not

applicable to our business or that

material effect is expected on our financial position and results of our operations.

Goodwill and Intangible Assets, Intangible Assets, Indefinite-Lived, Policy [Policy Text Block]

Valuation of Intangible Assets

The Company reviews identifiable intangible assets for impairment annually, or whenever events or changes in circumstances indicate the carrying amount

may

not

be recoverable. The Company’s intangible assets are currently solely the costs of obtaining trademarks and patents. Events or changes in circumstances that indicate the carrying amount

may

not

be recoverable include, but are

not

limited to, a significant change in the medical device marketplace and a significant adverse change in the business climate in which the Company operates. If such events or changes in circumstances are present, the undiscounted cash flows method is used to determine whether the intangible asset is impaired. Cash flows would include the estimated terminal value of the asset and exclude any interest charges. If the carrying value of the asset exceeds the undiscounted cash flows over the estimated remaining life of the asset, the asset is considered impaired, and the impairment is measured by reducing the carrying value of the asset to its fair value using the discounted cash flows method. The discount rate utilized is based on management’s best estimate of the related risks and return at the time the impairment assessment is made.

Valuation of Intangible Assets

We review identifiable intangible assets for impairment in accordance with ASC

350

— Intangibles —Goodwill and Other, whenever events or changes in circumstances indicate the carrying amount

may

not

be recoverable. Our intangible assets are currently solely the costs of obtaining trademarks and patents. Events or changes in circumstances that indicate the carrying amount

may

not

be recoverable include, but are

not

limited to, a significant change in the medical device marketplace and a significant adverse change in the business climate in which we operate. If such events or changes in circumstances are present, the undiscounted cash flows method is used to determine whether the intangible asset is impaired. Cash flows would include the estimated terminal value of the asset and exclude any interest charges. If the carrying value of the asset exceeds the undiscounted cash flows over the estimated remaining life of the asset, the asset is considered impaired, and the impairment is measured by reducing the carrying value of the asset to its fair value using the discounted cash flows method. The discount rate utilized is based on management’s best estimate of the related risks and return at the time the impairment assessment is made.

Use of Estimates, Policy [Policy Text Block]

Accounting Policies and Estimates

The presentation of financial statements is in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Accounting Policies and Estimate

The presentation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash Equivalents

The Company considers all highly liquid debt instruments with a maturity of

three

months or less when purchased to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value.

Cash Equivalents

The Company considers all highly liquid debt instruments with a maturity of

three

months or less when purchased to be cash equivalents. Cash equivalents are stated at cost, which approximate fair value.

Certificates of Deposit Policy [Policy Text Block]

Certificates of Deposit

Short-term interest-bearing investments are those with maturities of less than

one

year but greater than

three

months when purchased. Certificates with maturity dates beyond

one

year are classified as noncurrent assets. These investments are readily convertible to cash and are stated at cost plus accrued interest, which approximates fair value.

Certificates of Deposit

Short-term interest-bearing investments are those with maturities of less than

one

year but greater than

three

months when purchased. Certificates with maturity dates beyond

one

year are classified as noncurrent assets. These investments are readily convertible to cash and are stated at cost plus accrued interest, which approximates fair value.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

Under generally accepted accounting principles as outlined in the FASB’s Accounting Standards Codification (ASC)

820,

fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting standards ASC

820

establishes a

three

-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:

Level

– Observable inputs such as quoted prices in active markets;

Level

– Inputs other than quoted prices in active markets, that are observable either directly or indirectly; and

Level

– Unobservable inputs where there is little or

market data, which requires the reporting entity to develop its own assumptions.

The Company uses observable market data, when available, in making fair value measurements. Fair value measurements are classified according to the lowest level input that is significant to the valuation.

The fair value of the Company’s investment securities was determined based on Level

inputs.

Fair Value Measurements

Under generally accepted accounting principles as outlined in the Financial Accounting Standards Board’s

Accounting Standards Certification

(ASC)

820,

820

establishes a

three

-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:

Level

– Observable inputs such as quoted prices in active markets;

Level

– Inputs other than quoted prices in active markets, that are observable either directly or indirectly; and

Level

– Unobservable inputs where there is little or

market data, which requires the reporting entity to develop its own assumptions.

The fair value of the Company’s investment securities were determined based on Level

inputs.

Inventory, Policy [Policy Text Block]

Inventories

Inventories are stated at the lower of cost and net realizable value, with cost determined on a

first

-in,

first

-out basis. Inventory balances are as follows:

	September 30, 2018		December 31, 2017

Finished goods	$	61,587	$	62,932
Raw materials		157,610		141,028
Work-In-Process		58,958		61,085
Total	$	278,155	$	265,045

Inventories

Inventories are stated at the lower of cost or market, with cost determined on a

first

-in,

first

-out basis. Inventory balances are as follows:

	December 31, 2017		December 31, 2016

Finished goods	$	62,932	$	38,201
Raw materials		141,028		165,812
Work-In-Process		61,085		68,195
Total	$	265,045	$	272,208

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the respective assets. Estimated useful asset life by classification is as follows:

	Years
Computers and office equipment	3	-	7
Leasehold improvements		3
Manufacturing tooling	3	-	7
Demo equipment		3

The Company’s fixed assets consist of the following:

	September 30, 2018		December 31, 2017
Computers and office equipment	$	204,904	$	183,528
Leasehold improvements		140,114		25,635
Manufacturing tooling		108,955		108,955
Demo equipment		77,496		43,368
Total		531,469		361,486
Less: Accumulated depreciation		333,211		273,770
Total Fixed Assets, Net	$	198,258	$	87,716

Upon retirement or sale, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repairs are charged to operations as incurred.

Depreciation expense was

$26,120

and

$59,442

in the

three

and

nine

months ended

September 30, 2018

and was

$14,561

and

$44,764

for the

three

and

nine

months ended

September 30, 2017.

Property and Equipment

	Years
Computers and office equipment	3	-	7
Leasehold improvements		5
Manufacturing Tooling	3	-	7
Demo Equipment		3

The Company’s investment in Fixed Assets consists of the following:

	December 31, 2017		December 31, 2016
Computers and office equipment	$	183,528	$	164,318
Leasehold Improvements		25,635		25,635
Manufacturing Tooling		108,955		103,204
Demo Equipment		43,368		23,236
Total		361,486		316,393
Less: Accumulated Depreciation		273,770		214,897
Total Fixed Assets, Net	$	87,716	$	101,496

Depreciation expense was

$58,872

2017

and

$73,249

2016.

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Intangible Assets

Intangible assets consist of trademarks, patent costs and license fees. Amortization expense was

$38,387

and

$46,127

in the

three

and

nine

months ended

September 30, 2018

and was

$3,276

and

$9,067

in the

three

and

nine

months ended

September 30, 2017.

The assets are reviewed for impairment annually, and impairment losses, if any, are charged to operations when identified.

Intangible Assets

Intangible assets consist of trademarks and patent costs. Amortization expense was

$12,689

2017

and

$9,107

2016.

The assets are reviewed for impairment annually, and impairment losses, if any, are charged to operations when identified.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company accounts for income taxes in accordance with ASC

740

Income Taxes

(“ASC

740”

). Under ASC

740,

deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

There is

income tax provision in the accompanying statements of operations due to the cumulative operating losses that indicate a

100%

valuation allowance for the deferred tax assets and state income taxes is appropriate.

The Company reviews income tax positions expected to be taken in income tax returns to determine if there are any income tax uncertainties. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than

not

that the tax positions will be sustained on examination by taxing authorities, based on technical merits of the positions. The Company has identified

income tax uncertainties.

Tax years subsequent to

2014

remain open to examination by federal and state tax authorities.

Income Taxes

The Company accounts for income taxes in accordance with ASC

740

Income Taxes (“ASC

740”

)

. Under ASC

740,

not

that the tax positions will be sustained on examination by taxing authorities, based on technical merits of the positions. The Company has identified

income tax uncertainties.

Tax years subsequent to

2014

remain open to examination by federal and state tax authorities.

Offering Costs [Policy Text Block]

Offering Costs

Costs incurred which are direct and incremental to an offering of the Company’s securities are deferred and charged against the proceeds of the offering, unless such costs are deemed to be insignificant in which case they are expensed as incurred.

Intangible Assets, Finite-Lived, Policy [Policy Text Block]

Patents and Intellectual Property

January 25, 2014,

the Company filed a non-provisional Patent Cooperation Treaty (“PCT”) Application

No.

PCT/US2014/013081

claiming priority from the U.S. Provisional Patent Application, number

61756763

which was filed

one

year earlier on

January 25, 2013.

The “PCT” allows an applicant to file a single patent application to seek patent protection for an invention simultaneously in each of the

148

countries of the PCT, including the United States. Filing this single “international” patent application through the PCT is easier and more cost effective than filing separate applications directly with each national or regional patent office in which patent protection is desired.

The Company’s PCT patent application is for the new model of the surgical fluid waste management system. The Company obtained a favorable International Search Report from the PCT searching authority indicating that the claims in its PCT application are patentable (i.e., novel and non-obvious) over the cited prior art. A feature claimed in the PCT application is the ability to maintain continuous suction to the surgical field while measuring, recording and evacuating fluid to the facility’s sewer drainage system. This provides for continuous operation of the STREAMWAY System unit in suctioning waste fluids, which means that suction is

not

interrupted during a surgical operation, for example, to empty a fluid collection container or otherwise dispose of the collected fluid.

The Company holds the following granted patents in the United States and a pending application in the United States on its earlier models:

US7469727,

US8123731

and U.S. Publication

No.

US20090216205

(collectively, the “Patents”). These Patents will begin to expire on

August 8, 2023.

July 2015,

the Company filed an international PCT patent application for its fluid waste collection system and received a favorable determination by the International Searching Authority finding that all of the claims satisfy the requirements for novelty, inventive step and industrial applicability. The Company anticipates that the favorable International Search Report will result in allowance of its various national applications.

The United States Patent Office has assigned application

#14/763,459

to the Company’s previously filed PCT application.

As of

November 22, 2017,

the Company was informed that the European Patent Office has allowed all claims for application

#14743665.3

1651

and has sent a Notice of Intent to Grant.

As of

July 11, 2018,

the Company was informed that the European Patent

#EP2948200

was granted and published validating in the following countries: Belgium, Germany, Spain, France, United Kingdom, Ireland, Italy, Netherlands, Norway, Poland and Sweden.

Patents and Intellectual Property

January

25th,

2014,

the Company filed a non-provisional PCT Application

No.

PCT/US2014/013081

claiming priority from the U.S. Provisional Patent Application, number

61756763

which was filed

one

year earlier on

January

25th,

2013.

The Patent Cooperation Treaty (“PCT”) allows an applicant to file a single patent application to seek patent protection for an invention simultaneously in each of the

148

countries of the PCT, including the United States. By filing this single “international” patent application through the PCT, it is easier and more cost effective than filing separate applications directly with each national or regional patent office in which patent protection is desired.

Our PCT patent application is for the new model of the surgical fluid waste management system. We obtained a favorable International Search Report from the PCT searching authority indicating that the claims in our PCT application are patentable (i.e., novel and non-obvious) over the cited prior art. A feature claimed in the PCT application is the ability to maintain continuous suction to the surgical field while measuring, recording and evacuating fluid to the facilities sewer drainage system. This provides for continuous operation of the STREAMWAY System unit in suctioning waste fluids, which means that suction is

not

interrupted during a surgical operation, for example, to empty a fluid collection container or otherwise dispose of the collected fluid.

The Company holds the following granted patents in the United States and a pending application in the United States on its earlier models:

US7469727,

US8123731

and U.S. Publication

No.

US20090216205

(collectively, the “Patents”). These Patents will begin to expire on

August 8, 2023.

July 2015,

Skyline Medical filed an international (PCT) patent application for its fluid waste collection system and received a favorable determination by the International Searching Authority finding that all of the claims satisfy the requirements for novelty, inventive step and industrial applicability. Skyline anticipates that the favorable International Search Report will result in allowance of its various national applications.

The United States Patent Office has assigned application

#14/763,459

to our previously filed PCT application.

As of

November 22, 2017,

the Company was informed that the European Patent Office has allowed all our claims for application

#14743665.3

1651,

and has sent a Notice of Intent to Grant. Skyline is now in the process of identifying the key European countries that we will validate the patent in.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high credit quality financial institutions and, by policy, generally limits the amount of credit exposure to any

one

financial institution. The Company has

credit risk concentration because there are

funds in excess of insurance limits in a single bank.

Credit Risk

one

financial institution. The Company had a credit risk concentration as a result of depositing

$563,000

of funds in excess of insurance limits in a single bank.

Segment Reporting, Policy [Policy Text Block]

Segments

The Company operates in

two

segments for the sale of its medical device and consumable products. Substantially all the Company’s assets, revenues, and expenses for the

three

and

nine

months ended

September 30, 2018

and

2017

were located at or derived from operations in the United States. There was

$4,195

and

$288

in revenues from sales outside the United States during the

three

-month period of

September 2018

and

2017,

respectively; and

$10,061

and

$25,188

in revenues from sales outside of the United States during the

first

nine

months of

2018

and

2017,

respectively.

Segments

The Company operates in

two

segments for the sale of its medical device and consumable products. Substantially all of the Company’s assets, revenues, and expenses for

2017

and

2016

were located at or derived from operations in the United States. There was

$26,662

in revenues from sales outside of the United States during

2017.

Risks and Uncertainties Policy [Policy Text Block]

Risks and Uncertainties

The Company is subject to risks common to companies in the medical device industry, including, but

not

limited to, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, and compliance with regulations of the FDA and other governmental agencies.

Risks and Uncertainties

The Company is subject to risks common to companies in the medical device industry, including, but

not

Presentation of Taxes Collected From Customers, Policy [Policy Text Block]

Presentation of Taxes Collected from Customers

Sales taxes are imposed on the Company’s sales to nonexempt customers. The Company collects the taxes from customers and remits the entire amounts to the governmental authorities. The Company’s accounting policy is to exclude the taxes collected and remitted from revenues and expenses.

Revenue Recognition, Shipping and Handling Cost, Policy [Policy Text Block]

Shipping and Handling

Shipping and handling charges billed to customers are recorded as revenue. Shipping and handling costs are recorded within cost of goods sold on the statement of operations.

Advertising Costs, Policy [Policy Text Block]

Advertising

Advertising costs are expensed as incurred. Advertising expenses were

$37,060

2017,

and

$71,212

2016.

Research and Development Expense, Policy [Policy Text Block]

Research and Development

Research and development costs are charged to operations as incurred. Research and development costs were approximately

$289,000

and

$406,000

for

2017

and

2016,

respectively.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

The Company recognizes revenue in accordance with the SEC’s Staff Accounting Bulletin Revenue Recognition and ASC

606

- Revenue Recognition.

We recognize revenue when the following criteria are met: persuasive evidence of an arrangement exists – we receive both a signed purchase order and contract of terms and conditions confirming the sale from the customer; delivery has occurred – the goods are shipped from our warehouse and delivered and accepted by the customer; the selling price is fixed or determinable – confirmed on the customer purchase order and then invoiced immediately upon shipment of the goods; and collectability is reasonably assured – our customers are long standing hospitals, ambulatory surgical centers and others that pass credit checks. The terms of our agreements with our customers are specified in written agreements. These written agreements, the purchase order and the matching invoice, constitute the persuasive evidence of the arrangements with our customers that are a precondition to the recognition of revenue.

We undertake an evaluation of the creditworthiness of both new and, on a periodic basis, existing customers. Based on these reviews we determine whether collection of our prospective revenue is probable.

We have adopted the provisions of Accounting Standards Update, or “ASU”

2014

09,

Revenue from Contracts with Customers (Accounting Standards Codification, or “ASC”

606

), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Companies are permitted to adopt ASC

606

using a full retrospective or modified retrospective method. We adopted the standard on

January 1, 2018

using a modified retrospective method.

While we continue to assess all potential impacts of the standard, it is currently anticipated that the standard will

not

have a material impact on our financial statements.

Marketable Securities, Policy [Policy Text Block]

Investment Securities

Readily marketable investments in debt and equity services are classified as available-for-sale and are reported at fair value with unrealized gains losses recorded in other comprehensive income. Unrealized gains are charged to earnings when an incline in fair value above the cost basis is determined to be other-than-temporary. Realized gains and losses on dispositions are based on the net proceeds and the adjusted book value of the securities sold, using the specific identification method.

Receivables, Policy [Policy Text Block]

Receivables

Receivables are reported at the amount the Company expects to collect on balances outstanding. The Company provides for probable uncollectible amounts through charges to earnings and credits to the valuation based on management’s assessment of the current status of individual accounts, changes to the valuation allowance have

not

been material to the financial statements.

Standard Product Warranty, Policy [Policy Text Block]

Product Warranty Costs

2017

and in

2016,

the Company incurred approximately

$6,209

and

$34,665

in warranty costs.