10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission file number: 000-55723

GUARDION HEALTH SCIENCES, INC.

(Exact name of Registrant as specified in its charter)

Delaware	47-4428421
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2925 Richmond Avenue

Suite 1200

Houston, Texas 77098

Telephone: 800-873-5141

(Address and telephone number of principal executive offices)

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	GHSI	The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No

As of August 16, 2021, there were 26,426,993 shares of the Company’s common stock, par value $0.001 per share, issued and outstanding.

TABLE OF CONTENTS

		Page No.
PART I – FINANCIAL INFORMATION
ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	3
	Balance Sheets – As of June 30, 2021 (Unaudited) and December 31, 2020	3
	Statements of Operations (Unaudited) – Three Months and Six Months Ended June 30, 2021 and 2020	4
	Statement of Stockholders’ Equity (Unaudited) – Three Months and Six Months Ended June 30, 2021 and 2020	5
	Statements of Cash Flows (Unaudited) – Six Months Ended June 30, 2021 and 2020	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	38
ITEM 4.	CONTROLS AND PROCEDURES	38
PART II – OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	39
ITEM 1A.	RISK FACTORS	39
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	39
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	39
ITEM 4.	MINE SAFETY DISCLOSURES	39
ITEM 5.	OTHER INFORMATION	39
ITEM 6.	EXHIBITS	40
SIGNATURES		41

2

PART I – FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Guardion Health Sciences, Inc.

Condensed Consolidated Balance Sheets

	June 30,			December 31,
	2021			2020
		(Unaudited)
Assets
Current assets
Cash	$	5,502,411		$	8,518,732
Short-term investments		7,000,266			-
Accounts receivable		1,884,782			11,248
Inventories		956,259			384,972
Prepaid expenses		1,203,169			179,931
Total current assets		16,546,887			9,094,883
Deposits		11,751			11,751
Prepaid expense		302,331			-
Property and equipment, net		245,711			285,676
Right of use asset, net		339,262			418,590
Intangible assets, net		11,850,833			50,000
Goodwill		11,988,050			-
Total assets	$	41,284,825		$	9,860,900
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	768,338		$	608,313
Accrued expenses		867,923			127,637
Operating lease liability – current		168,700			162,845
Payable to former officer		-			148,958
Derivative warrant liability		-			25,978
Total current liabilities		1,804,961			1,073,731
Operating lease liability – long term		186,427			271,903
Total liabilities		1,991,388			1,345,634
Commitments and contingencies
Stockholders’ Equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock, $0.001 par value; 250,000,000 shares authorized; 24,426,993 shares and 15,170,628 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		24,427			15,171
Additional paid-in capital		100,535,886			62,583,423
Accumulated deficit		(61,266,876	)		(54,083,328	)
Total stockholders’ equity		39,293,437			8,515,266
Total liabilities and stockholders’ equity	$	41,284,825		$	9,860,900

See accompanying notes to condensed consolidated financial statements.

3

Guardion Health Sciences, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenue
Clinical nutrition	$	1,171,445		$	1,152,894		$	1,333,588		$	1,304,028
Diagnostics equipment		52,275			35,315			123,429			126,505
Other		-			2,700			-			6,100
Total revenue		1,223,720			1,190,909			1,457,017			1,436,633
Cost of goods sold
Clinical nutrition		639,188			628,205			724,105			695,291
Diagnostics equipment		26,031			15,278			74,150			55,920
Other		-			1,096			-			2,477
Total cost of goods sold		665,219			644,579			798,255			753,688
Gross profit		558,501			546,330			658,762			682,945
Operating expenses
Research and development		16,756			44,581			37,364			75,769
Sales and marketing		440,793			519,067			898,520			1,007,913
General and administrative		2,537,826			1,712,183			4,829,277			3,228,698
Transaction costs related to acquisition of Activ Nutritional, LLC		2,103,680			-			2,103,680			-
Costs related to resignation of former officer (including the reversal of previously recognized stock compensation expense of $1,401,582 and $965,295 during the three months and six months ended June 30, 2020, respectively)		-			(1,052,223	)		-			(615,936	)
Impairment loss on equipment held for sale		-			30,948			-			30,948
Total operating expenses		5,099,055			1,254,556			7,868,841			3,727,392
Loss from operations		(4,540,554	)		(708,226	)		(7,210,079	)		(3,044,447	)
Other income (expense):
Interest expense		-			(1,790	)		-			(3,538	)
Interest income		266			-			266			-
Change in fair value of derivative liability		-			2,856			-			(6,088	)
Total other income (expense)		266			1,066			266			(9,626	)
Net loss	$	(4,540,288	)	$	(707,160	)	$	(7,209,813	)	$	(3,054,073	)
Net loss per common share – basic and diluted	$	(0.19	)	$	(0.05	)	$	(0.31	)	$	(0.22	)
Weighted average common shares outstanding – basic and diluted		24,426,993			14,427,869			22,897,683			13,766,465

See accompanying notes to condensed consolidated financial statements.

4

Guardion Health Sciences, Inc.

Condensed Consolidated Statement of Stockholders’ Equity

(Unaudited)

	Common Stock				Additional Paid-In		Accumulated			Total Stockholders’
	Shares		Amount		Capital		Deficit			Equity
	Three and Six Months Ended June 30, 2021
Balance at December 31, 2020		15,170,628	$	15,171	$	62,583,423	$	(54,083,328	)	$	8,515,266
Cumulative effect adjustment from the impact of adoption of ASU 2020-06 related to warrants (See Notes 2 and 9)		-		-		-		26,265			26,265
Fair value of vested stock options		-		-		205,772		-			205,772
Fair value of vested restricted stock		-		-		181,843		-			181,843
Common stock issued for cash, net of offering costs		7,608,674		7,608		33,654,989		-			33,662,597
Common stock issued upon exercise of warrants		1,647,691		1,648		3,566,767		-			3,568,415
Net loss		-		-		-		(2,669,525	)		(2,669,525	)
Balance at March 31, 2021		24,426,993		24,427		100,192,794		(56,726,588	)		43,490,633
Fair value of vested stock options		-		-		183,452		-			183,452
Fair value of vested restricted stock		-		-		159,640		-			159,640
Net loss		-		-		-		(4,540,288	)		(4,540,288	)
Balance at June 30, 2021		24,426,993	$	24,427	$	100,535,886	$	(61,266,876	)	$	39,293,437

	Common Stock				Additional Paid-In			Accumulated			Total Stockholders’
	Shares		Amount		Capital			Deficit			Equity
	Three and Six Months Ended June 30, 2020
Balance at December 31, 2019		12,497,094	$	12,497	$	57,531,014		$	(45,511,671	)	$	12,031,840
Fair value of vested stock options – officer and director		-		-		436,287			-			436,287
Fair value of vested stock options		-		-		55,281			-			55,281
Issuance of common stock for services		4,167		25		12,300			-			12,325
Issuance of common stock – warrant exercises		1,730,400		10,382		3,540,399			-			3,550,781
Net loss		-		-		-			(2,346,913	)		(2,346,913
Balance at March 31, 2020		14,231,661		22,904		61,575,281			(47,858,584	)		13,739,601
Fair value of vested stock options – officer and director		-		-		(1,377,223	)		-			(1,377,223	)
Fair value of vested stock options		-		-		41,782			-			41,782
Issuance of common stock – warrant exercises		48,666		487		998,153			-			998,640
Net loss		-		-		-			(707,160	)		(707,160	)
Balance at June 30, 2020		14,280,327	$	23,391	$	61,237,993		$	(48,565,744	)	$	12,695,640

See accompanying notes to condensed consolidated financial statements.

5

Guardion Health Sciences, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	June 30,
	2021			2020
Operating Activities
Net loss	$	(7,209,813	)	$	(3,054,073	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		140,275			46,619
Impairment loss on equipment held for sale		-			30,948
Amortization of operating lease right-of-use asset		79,328			76,327
Fair value of vested stock options		389,224			-
Fair value of vested restricted stock		341,483			109,388
Fair value of vested stock options – officer and director		-			(940,936	)
Change in fair value of derivative liability		-			6,088
Changes in operating assets and liabilities:
(Increase)/decrease:
Accounts receivable		(73,839	)		44,157
Inventories		41,776			(607,162	)
Prepaid expenses		(1,276,545	)		(219,380	)
Increase/(decrease):
Accounts payable		(153,706	)		262,496
Operating lease liability		(79,621	)		(74,070	)
Accrued expenses		665,042			(12,591
Payable to former officer		(148,958	)		311,458
Net cash used in operating activities		(7,285,354	)		(4,020,731	)
Investing Activities
Purchase of property and equipment		(1,142	)		(40,733	)
Purchase of US Treasury Bills		(35,000,000	)		-
Sale of US Treasury Bills		27,999,734			-
Cash paid for acquisition, net of cash acquired		(25,960,572	)		-
Net cash used in investing activities		(32,961,980	)		(40,733	)
Financing Activities
Proceeds from sale of common stock, net		33,662,599			-
Proceeds from exercise of warrants		3,568,414			4,549,421
Net cash provided by financing activities		37,231,013			4,549,421
Cash:
Net (decrease) increase		(3,016,321	)		487,957
Balance at beginning of period		8,518,732			11,115,502
Balance at end of period	$	5,502,411		$	11,603,459
Supplemental disclosure of cash flow information:
Cash paid for:
Income taxes	$	20,844			-
Non-cash financing activities:
Reclass of prepaid costs to inventory	$	-		$	308,178
Reclass of equipment sold from property and equipment to equipment held for sale	$	-		$	55,448
Adjust warrant liability for adoption of ASU 2020-06	$	25,978		$	-
Reclass of property and equipment to inventory	$	-		$	8,771

See accompanying notes to condensed consolidated financial statements.

6

Guardion Health Sciences, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Three Months and Six Months Ended June 30, 2021 and 2020

1. Organization and Business Operations

Business

Guardion Health Sciences, Inc. (the “Company”) is a clinical nutrition and diagnostics company that develops and distributes clinically supported nutrition, medical foods, supplements and medical devices. The Company offers a portfolio of science-based, clinically supported products and devices designed to support healthcare professionals and providers, and their patients and consumers. In June 2021, the Company acquired Activ Nutritional, LLC (“Activ”), the owner and distributor of the Viactiv® line of chewable mineral supplements for bone health and other applications (see Note 3). Prior to its acquisition of Activ, the Company has been primarily engaged in research and development, product commercialization and capital raising activities.

The Company was formed in December 2009 as a California limited liability company under the name P4L Health Sciences, LLC. On June 30, 2015, the Company converted from a California limited liability company to a Delaware corporation, and changed its name from Guardion Health Sciences, LLC to Guardion Health Sciences, Inc.

Liquidity

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. For the six months ended June 30, 2021, the Company incurred a net loss of $7,209,813 and used cash in operating activities of $7,285,354. At June 30, 2021, the Company had cash and short-term investments on hand totaling $12,502,677 and working capital of $14,741,926. Notwithstanding the net loss for the six months ended June 30, 2021, management believes that its current cash balance is sufficient to ensure continuation of the Company as a going concern for at least one year from the date of this quarterly report.

The amount and timing of future cash requirements will depend, in part, on the Company’s ability to ultimately achieve operating profitability. The Company expects to continue to incur net losses and negative operating cash flows in the near-term and will continue to incur significant expenses for the development, commercialization and distribution of its clinical nutrition products (including the Viactiv® product line), the development and commercialization of its diagnostics equipment, and the successful development and commercialization of any new products or product lines. The Company may also utilize cash to fund additional acquisitions.

The Company may seek to raise additional debt and/or equity capital to fund future operations and strategic initiatives, but there can be no assurances that the Company will be able to secure such additional financing in the amounts necessary to fully fund its operating requirements on acceptable terms or at all. Over time, if the Company is unable to access sufficient capital resources on a timely basis to fund its operations, the Company may be forced to reduce or discontinue some or all of its technology and product development programs and curtail operations.

COVID-19

The Company is subject to risks and uncertainties of the COVID-19 pandemic that could adversely impact our business. The Company has implemented additional health and safety precautions and protocols in response to the pandemic and government guidelines, including curtailing employee travel and primarily working remotely. During 2020 and through the first half of 2021, sales of certain products remained flat as compared to prior comparable periods, as many professional offices were closed for long periods, or operating with limited capacity, due to COVID-19 related orders. During 2020 and through the second quarter of 2021, the Company did not experience a jeopardization of its supply chain due to the COVID-19 outbreak.

7

The extent of the impact of the COVID-19 pandemic has had and will continue to have on the Company’s business is highly uncertain and difficult to predict and quantify. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat it, including vaccination efforts and new strains of the virus, as well as the economic impact on local, regional, national and international markets.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed with the SEC. The condensed consolidated balance sheet as of December 31, 2020 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including notes, required by GAAP.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company’s financial position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. 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, 2021.

Reverse Stock Split

On March 1, 2021, following stockholder and board approval, the Company effectuated a 1-for-6 reverse split of its issued and outstanding shares of common stock, without any change to its par value. The authorized number of shares of common stock were not affected by the reverse stock split. No fractional shares were issued in connection with the reverse stock split, as all fractional shares were rounded up to the next whole share.

Accordingly, all share and per share amounts presented herein with respect to common stock have been retroactively adjusted to reflect the above-described reverse stock split for all periods presented.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, VectorVision Ocular Health, Inc., NutriGuard Formulations, Inc., Transcranial Doppler Solutions, Inc, and Activ Nutritional, LLC. All intercompany balances and transactions have been eliminated in consolidation.

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. 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 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 from those estimates.

8

Revenue Recognition

The Company generates its revenue from two business segments:

● Clinical Nutrition

● Diagnostics Equipment

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Revenue is recognized when control of promised goods or services is transferred to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those products or services. The Company reviews its sales transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable.

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.

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. Historically the Company has not experienced any significant payment delays from customers.

In certain circumstances, returns of products are allowed. A right of return does not represent a separate performance obligation, but because customers are allowed to return products, the consideration to which the Company expects to be entitled is variable. Upon evaluation of historical product returns, the Company determined it is probable that such returns will not cause a significant reversal of revenue in the future. Due to the insignificant amount of historical returns, as well as the standalone nature of the Company’s products and 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 segment are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Clinical nutrition	$	1,171,445	$	1,152,894	$	1,333,588	$	1,304,028
Diagnostics equipment		52,275		35,315		123,429		126,505
Other		-		2,700		-		6,100
	$	1,223,720	$	1,190,909	$	1,457,017	$	1,436,633

The Company’s Clinical Nutrition revenues earned during the three months and six months ended June 30, 2021 and 2020 are derived from distributors and individual retail customers in North America. Diagnostics Equipment revenues are derived from a worldwide customer base consisting of both retail customers and distributors. Sales to distributors were approximately 81% and 58% of total revenues for the six months ended June 30, 2021 and 2020, respectively, which included the Viactiv® product line from June 1, 2021 through June 30, 2021.

Revenues by geographical area are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
North America	$	1,176,608	$	270,664	$	1,348,748	$	505,023
Malaysia		-		890,000		-		890,000
Asia - other		29,787		22,990		88,049		25,790
Europe and other		17,325		7,255		20,220		15,820
	$	1,223,720	$	1,190,909	$	1,457,017	$	1,436,633

9

Business Combinations

The Company accounts for its business combinations using the acquisition method of accounting where the purchase consideration is allocated to the tangible and intangible assets acquired, and liabilities assumed, based on their respective fair values as of the acquisition date. The excess of the fair value of the purchase consideration over the estimated fair values of the net assets acquired is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth and margins, future changes in technology, brand awareness and discount rates. Fair value estimates are based on the assumptions that management believes a market participant would use in pricing the asset or liability.

Investments

Short-term investments as of June 30, 2021, consist of a U.S. Treasury Bill, which is classified as held-to-maturity. The Company’s U.S. Treasury Bill matured July 29, 2021 and the proceeds were reinvested into another U.S. Treasury Bill that is scheduled to mature approximately 30 days from the date of purchase. Unrealized gains and losses were de minimus. As of June 30, 2021, the carrying value of the Company’s U.S. Treasury Bill approximates its fair value due to its short-term maturity.

Accounts Receivable

Accounts receivable are recorded net of an allowance for expected losses. Management evaluates the collectability of its trade accounts receivable and determines an allowance for doubtful accounts based on historical write-offs, known or expected trends, and the identification of specific balances deemed uncollectible based on a customer’s financial condition, credit history and the current economic conditions.

There was no allowance for doubtful accounts as of June 30, 2021 and December 31,2020.

Inventories

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out (“FIFO”) basis. The Company records adjustments to its inventory for estimated obsolescence or diminution in net realizable value equal to the difference between the cost of the inventory and the estimated net realizable value. When evidence exists that the net realizable value of inventory is lower than its cost, the difference is recognized as a loss in the period in which it occurs. Once inventory has been written down, it creates a new cost basis for inventory that may not subsequently written up. For the three months and six months ended June 30, 2021 and 2020, there were no write-downs of inventory.

Intangible Assets

Amortizable finite-lived identifiable intangible assets consist of a trade name and customer relationships acquired in the acquisition of Activ effective June 1,2021 (See Note 3), and are stated at cost less accumulated amortization. The trade name and customer relationships are being amortized over a period of 10 years. The Company follows ASC 360 in accounting for finite-lived intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts. As of June 30, 2021, the Company determined there were no indicators of impairment of its intangible assets.

10

At June 30, 2021 and December 31, 2020, the Company has a trademark for $50,000 classified as an indefinite-lived intangible asset.

 Goodwill

Goodwill consists of the excess of the cost of Activ (see Note 3) over the fair value of amounts assigned to assets acquired and liabilities assumed. Under the guidance of ASC 350, goodwill is not amortized, rather it is tested for impairment annually, and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. An impairment loss generally would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit and would be measured as the excess carrying value of goodwill over the derived fair value of goodwill. The Company’s policy is to perform an annual impairment testing for its reporting units on December 31 of each fiscal year.

Concentrations

During the three months ended June 30, 2021, two customers accounted for approximately 39% and 13% of the Company’s sales. No other customer accounted for more than 10% of sales during the three months ended June 30, 2021 or 2020.

During the six months ended June 30, 2021, two customers accounted for approximately 33% and 11% of the Company’s sales. No other customer accounted for more than 10% of sales during the six months ended June 30, 2021 or 2020.

Cash balances are maintained at large, well-established financial institutions. At times, cash balances exceed federally insured limits. Insurance coverage limits are $250,000 per depositor at each financial institution. The Company believes that no significant concentration of credit risk exists with respect to its cash balances because of its assessment of the creditworthiness and financial viability of the financial institutions that hold such cash balances.

Research and Development Costs

Research and development costs consist primarily of fees paid to consultants and outside service providers, and other expenses relating to the acquisition, design, development and testing of the Company’s Clinical Nutrition products. Research and development expenditures are expensed as incurred and totaled $16,756 and $44,581 for the three months ended June 30, 2021 and 2020, respectively, and $37,364 and $75,769 for the six months ended June 30, 2021 and 2020, respectively.

Patent Costs

The Company is the owner of four issued domestic patents, two pending domestic patent applications and one granted patent in Canada. Due to the significant uncertainty associated with the successful development of one or more commercially viable products based on the Company’s research efforts and any related patent applications, patent costs, including patent-related legal fees, filing fees and internally generated costs, are expensed as incurred. During the six months ended June 30, 2021, and 2020, patent costs were $34,940 and $60,501, respectively, and are included in general and administrative costs in the statements of operations.

Stock-Based Compensation

The Company periodically issues stock-based compensation to employees and non-employees in non-capital raising transactions for services and for financing costs. Such grants vest and expire according to terms established at the issuance date. The Company accounts for such grants issued and vesting based on ASC 718, Compensation-Stock Compensation whereby the value of the award is measured on the date of grant and recognized for employees as compensation expense on a straight-line or graded basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services.

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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 a period. 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. 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 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:

	June 30,
	2021		2020
Warrants		485,067		2,578,390
Options		978,087		486,524
		1,463,154		3,064,914

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 sale of an asset or paid to transfer a liability in an orderly transaction between market participants at 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 - Quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date.

Level 2 - Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

Level 3 - Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions.

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 Company believes the carrying amount of its financial instruments (consisting of cash, short-term investments, accounts receivable, and accounts payable and accrued liabilities) approximates fair value due to the short-term nature of such instruments.

At December 31, 2020, the Company’s balance sheets included Level 2 liabilities comprised of the fair value of warrant liabilities of $25,978 (see Note 9). At June 30, 2021, the Company had no warrant liabilities.

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Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. As a smaller reporting company, ASU 2016-13 will be effective for the Company beginning January 1, 2023, with early adoption permitted. The Company is currently assessing the impact of adopting this standard on the Company’s financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 of the two-step goodwill impairment test, under which a goodwill impairment loss was measured by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-04 requires only a one-step quantitative impairment test, whereby a goodwill impairment loss is measured as the excess of a reporting unit’s carrying amount over its fair value (not to exceed the total goodwill allocated to that reporting unit). Entities are required to apply ASU 2017-04 on a prospective basis. ASU 2017-04 was effective January 1, 2020. The adoption of ASU 2017-04 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions and enhances and simplifies various aspects of the income tax accounting guidance in ASC 740. ASU 2019-12 was effective January 1, 2021. The adoption of ASU 2019-12 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In August 2020, the FASB issued 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) (“ASU 2020-06”). ASU 2020-06 reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. For contracts in an entity’s own equity, the type of contracts primarily affected by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. This update simplifies the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective January 1, 2024, for the Company and the provisions of this update can be adopted using either the modified retrospective method or a fully retrospective method. Early adoption is permitted, but no earlier than January 1, 2021.

At December 31, 2020, the Company had recorded a derivative liability of $25,978 related to 10,417 warrants issued in 2019 because the settlement provisions of the warrants contained language that the shares underlying the warrants are required to be registered. Effective January 1, 2021, the Company early adopted ASU 2020-06 using the modified retrospective approach. ASU 2020-06 removed the requirement to consider if the warrants would be settled in registered shares, and accordingly, the adoption of ASU 2020-06 resulted in a decrease to accumulated deficit of $25,978 and a decrease in derivative warrant liability of $25,978 on January 1, 2021.

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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 (“ASU 2021-04”). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt ASU 2021-04 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The adoption of ASU 2021-04 is not expected to have any impact on the Company’s consolidated financial statement presentation or disclosures.

Other recent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

3. Acquisition of Activ Nutritional, LLC.

On June 1, 2021, the Company completed the acquisition of Activ. The acquisition was made pursuant to an equity purchase agreement dated May 18, 2021 between the Company, Adare Pharmaceuticals, Inc., (“Adare”), and Activ. The Company acquired all of the issued and outstanding equity of Activ from Adare for $26,000,000 in cash, subject to certain adjustments as provided in the equity purchase agreement.

Activ owns the Viactiv® line of supplement chews for bone health, immune health and other applications which are currently marketed through many of the nation’s largest retailers, including, among others, Walmart (retail and online), Target and Amazon. The Viactiv product lines are expected to become the Company’s most prominent product lines for the foreseeable future.

The Company utilized the acquisition method of accounting for the acquisition in accordance with ASC 805, Business Combinations. The Company allocated the purchase price to Activ’s tangible assets, identifiable intangible assets, and assumed liabilities at their estimated fair values as of the date of acquisition. The fair value of the intangible assets was estimated using the income approach, pursuant to which after-tax cash flows are discounted to present value based on projections and other available financial data. The cash flows were based on estimates used to value the acquisition, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model, as well as the weighted average cost of capital. The valuation assumptions took into consideration the Company’s estimates of customer attrition and revenue growth projections. The excess of the purchase price paid by the Company over the estimated fair value of identified tangible and intangible assets has been recorded as goodwill.

The following table summarizes the allocation of the fair value of the purchase consideration to the fair value of tangible assets, identifiable intangible assets, and assumed liabilities of Activ on the date of acquisition:

Fair value of consideration :
Purchase price, as adjusted, paid in cash	$	26,044,570
Allocation of the consideration to the fair value of assets acquired and liabilities assumed:
Cash	$	8,468
Accounts receivable		1,799,695
Inventories		613,063
Prepaids		49,025
Accounts payable		(313,731	)
Net tangible assets		2,156,520
Trade names and trademarks		9,200,000
Customer relationships		2,700,000
Net identifiable intangible assets		11,900,000
Goodwill		11,988,050
Fair value of net assets acquired	$	26,044,570

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The Company consolidated Activ’s operations with the Company’s operations commencing June 1, 2021, the closing date of the transaction. Activ’s operations are included in the Company’s Clinical Nutrition segment. The amount of revenue and net income of Activ included in the Company’s consolidated statements of operations during the three months and six months ended June 30, 2021, was $1,049,803 and $231,288, respectively.

Acquisition-related transaction costs (e.g., legal, due diligence, valuation, investment banking and other professional fees) are not included as a component of consideration transferred, but were expensed as incurred. During the three months and six months ended June 30, 2021, the Company incurred approximately $2,104,000 of acquisition-related costs, which are included as a line item in the Company’s consolidated statements of operations.

Pro Forma Information

The following unaudited pro forma condensed consolidated statement of operations for the three months and six months ended June 30, 2021 and 2020 is presented as if the acquisition of Activ had occurred on January 1, 2020, after giving effect to certain pro forma adjustments. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the acquisition had actually been consummated on January 1, 2020. These results are prepared in accordance with ASC 606.

	Unaudited Pro forma for the three months ended						Unaudited Pro forma for the six months ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Revenue	$	3,016,094		$	4,257,140		$	6,989,810		$	7,520,816
Net loss	$	(2,434,005	)	$	(815,869	)	$	(4,641,387	)	$	(5,282,721	)
Net loss per share-basic and diluted	$	(0.10	)	$	(0.06	)	$	(0.20	)	$	(0.38	)

Trade name and trademarks, and customer relationship intangible assets are being amortized over an estimated useful life of 10 years. The pro forma adjustments include a net increase in amortization expense to record amortization expense for the $11,900,000 of acquired net identifiable intangible assets, and an adjustment to present acquisition-related transaction costs and other one-time costs directly attributable to the acquisition as if they were incurred in the earliest period presented.

4. Inventories

Inventories consisted of the following:

	June 30,		December 31,
	2021		2020
Raw materials	$	69,904	$	218,307
Finished goods		886,355		166,665
	$	956,259	$	384,972

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The Company’s inventories are stated at the lower of cost or net realizable value on a first-in, first-out (FIFO) basis.

5. Property and Equipment, Net

Property and equipment, net consisted of the following:

	June 30,			December 31,
	2021			2020
Leasehold improvements	$	103,255		$	103,255
Testing equipment		348,124			348,124
Furniture and fixtures		197,349			197,349
Computer equipment		69,602			68,460
Office equipment		9,835			9,835
		728,165			727,023
Less accumulated depreciation and amortization		(482,454	)		(441,347	)
	$	245,711		$	285,676

For the six months ended June 30, 2021 and 2020, depreciation and amortization expense was $41,107 and $46,619, respectively.

6. Intangible Assets, Net

Intangible assets, net consisted of the following:

	June 30,			December 31,
	2021			2020
Trade name	$	9,200,000		$	-
Customer relationships		2,700,000			-
Trademark		50,000			50,000
		11,950,000			50,000
Less accumulated amortization		(99,167	)		-
	$	11,850,833		$	50,000

The trade name and customer relationship were acquired June 1, 2021 in conjunction with the acquisition of Activ (see Note 3) and are being amortized over a period of 10 years. For the three months and six months ended June 30, 2021 and 2020, amortization expense was $99,167.

The expected future amortization expense for amortizable finite-lived intangible assets as of June 30, 2021 is as follows:

	Total
2021 (remaining 6 months)	$	595,000
2022		1,190,000
2023		1,190,000
2024		1,190,000
2025		1,190,000
Thereafter		6,445,833
Total future expected amortization expense	$	11,800,833

7. Operating Leases

The Company leases an office and certain warehouse space under two operating leases. The Company accounts for its leases under ASC 842, Leases. During the three months ended June 30, 2021 and 2020, lease costs totaled $52,585 and $30,488, respectively, and during the six months ended June 30, 2021 and 2020, lease costs totaled $98,486 and $74,069, respectively.

As of December 31, 2020, the Company’s net right of use asset totaled $418,590. During the three months and six months ended June 30, 2021, the Company recorded amortization of right-of-use asset of $39,470 and $79,328, respectively. At June 30, 2021, the net right-of-use assets were $339,262.

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As of December 31, 2020, the Company’s operating lease liabilities totaled $434,748. During the six months ended June 30, 2021, the Company made payments of $101,993 towards the operating lease liability. As of June 30, 2021, the operating lease liabilities totaled $355,127.

As of June 30, 2021, the weighted average remaining lease terms for operating leases are 2.04 years, and the weighted average discount rate for operating lease is 3.9%.

Future minimum lease payments under the leases are as follows:

Year ending	Operating Leases
Remainder of 2021	$	89,479
2022		182,249
2023		98,417
Total lease payments		370,145
Less: Imputed interest/present value discount		(15,018	)
Present value of lease liabilities		355,127
Less: Current portion		(168,700	)
	$	186,427

8. Payable to Former Officer

Effective June 15, 2020, Michael Favish resigned as Chief Executive Officer of the Company and also resigned from the Company’s Board of Directors. Terms of the settlement agreement between the parties included the continuation of his previous salary of $325,000 during the twelve months subsequent to his resignation. The $325,000 of aggregate settlement payments was recorded in costs related to resignation of former officer expense in the consolidated statements of operations during the three months and six months ended June 30, 2020. The final payment due the former officer was made on June 15, 2021.

9. Derivative Liability

On April 9, 2019, the Company issued 10,417 warrants with an exercise price of $30.00 per share to the underwriter in connection with the Company’s initial public offering. The Company accounted for these warrants as a derivative liability in the financial statements because they were associated with the initial public offering, which was a registered offering, and the settlement provisions contained language that the shares underlying the warrants were required to be registered. The fair value of the warrants was remeasured at each reporting period, and the change in the fair value was recognized in earnings in the statements of operations. At December 31, 2020, the fair value of the derivative warrant liability was $25,978.

Effective January 1, 2021, the Company early adopted ASU 2020-06 using the modified retrospective approach. ASU 2020-06 removed the requirement to consider if the warrants would be settled in registered shares, and accordingly, the adoption of ASU 2020-06 resulted in a decrease to accumulated deficit of $25,978 and a decrease in derivative warrant liability of $25,978 on January 1, 2021.

At December 31, 2020, the fair value of such warrant was determined to be $2.49 using the Black-Scholes option pricing model utilizing the following assumptions:

	Warrant Liability As of
	December 31, 2020
Stock price	$	2.49
Risk free interest rate		0.17	%
Expected volatility		148	%
Expected life in years		3.8
Expected dividend yield		0	%
Number of warrants		10,417
Fair value of warrants	$	25,978

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10. Stockholders’ Equity

Common Stock

January 2021 and February 2021 At the Market Offerings

On January 8, 2021, the Company entered into a sales agreement with Maxim Group LLC (“Maxim”) pursuant to which the Company could sell up to $10,000,000 worth of shares of common stock in an “at the market” offering through Maxim (the “January 2021 1st ATM Offering”). The offer and sale of the shares was made pursuant to a shelf registration statement on Form S-3. The Company agreed to pay Maxim a commission equal to 3.0% of the aggregate gross proceeds from each sale of shares. On January 15, 2021, the Company completed the January 2021 1st ATM Offering, pursuant to which the Company sold an aggregate of 2,559,834 shares of its common stock and raised net proceeds (after deduction for sales commissions) of approximately $9,700,000.

On January 28, 2021, the Company entered into a sales agreement with Maxim pursuant to which the Company could sell up to $25,000,000 worth of shares of common stock in an “at the market” offering through Maxim (the “January 2021 2nd ATM Offering”). On February 10, 2021, the Company completed the January 2021 2nd ATM Offering, pursuant to which the Company sold an aggregate of 5,048,840 shares of its common stock and raised net proceeds (after deduction for sales commissions) of approximately $24,250,000.

The Company incurred costs related to these financings of approximately $327,000 which is reflected as a reduction to the proceeds from the shares issued. The net cash received from both offerings after all expenses was approximately $33,623,000.

Warrants

A summary of the Company’s warrant activity is as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
December 31, 2020		2,132,758		$	2.48		3.81
Granted		-			-		-
Forfeitures		-			-		-
Expirations		-			-		-
Exercised		(1,647,691	)		2.26		-
June 30, 2021, all exercisable		485,067			2.71		3.31

The exercise prices of warrants outstanding and exercisable as of June 30, 2021 are as follows:

Warrants Outstanding and Exercisable (Shares)		Exercise Prices
	160,108	$	2.05
	146,667		2.67
	112,001		3.30
	37,700		3.51
	18,174		17.25
	10,417		30.00
	485,067

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During the six months ended June 30, 2021, investors exercised a total of 1,647,691 warrants for 1,647,691 shares of common stock. The warrants were exercisable for an average price of $2.26 per share, which resulted in cash proceeds to the Company of $3,568,415.

Stock Options

A summary of the Company’s stock option activity is as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
December 31, 2020		778,196			9.32		6.38
Granted		269,339			2.98		9.80
Forfeitures		(69,445	)		26.40		-
Expirations		-			-		-
Exercised		-			-		-
June 30, 2021, outstanding		978,090		$	6.48		7.20
June 30, 2021, exercisable		547,631		$	8.50		5.40

The exercise prices of options outstanding and exercisable as of June 30, 2021 are as follows:

Options Outstanding		Exercise Prices
(Shares)
	41,667		1.48
	50,000		1.61
	66,668		1.76
	5,001		1.91
	41,667		2.33
	1,667		2.46
	16,667		3.25
	152,671		3.95
	375,000		6
	104,167		12
	10,415		13.8
	112,500		15
	978,090

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During the six months ended June 30, 2021, the Company granted options to purchase 269,339 shares of common stock to employees and members of the Board of Directors with a grant date fair value of $652,360 using a Black-Scholes option pricing model based on the following assumptions: (i) volatility rates of 117% to 119%, (ii) discount rates of 0.38% to 1.28%, (iii) zero expected dividend yield, and (iv) expected life of 6 years. The options have an exercise price of $1.61 to $3.95 per share. 67,558 of the options will vest on the one-year anniversary of the grant date and the remaining 135,113 options will vest on monthly basis over two years. Options for 66,668 shares vest ratably over three years. As part of their annual compensation for service on the Board of Directors, each of the four non-officer directors receives annual stock option grant for 16,333 shares of the Company’s common stock on the earlier of the annual meeting of stockholders or June 30. The option shall vest and become exercisable in eight equal installments on the last day of each of the subsequent eight calendar quarter-end dates following the date of grant.

The volatility of the Company’s common stock is based on an average volatility of similar companies in the same industry. The risk-free interest rate was based on rates established by the Federal Reserve Bank. The expected dividend yield was based on the fact that the Company has not paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future. The expected life of the stock options granted is estimated using the “simplified” method, whereby the expected term equals the average of the vesting term and the original contract.

During the six months ended June 30, 2021 and 2020, the Company recognized stock-compensation expense related to the fair value of vested stock options of $389,224 and $(940,936), respectively, which was recorded in general and administrative expense.

As of June 30, 2021, the Company had an aggregate of 472,131 remaining unvested options outstanding, with a remaining fair value of $715,836, with a weighted average remaining life of 9.31 years. The aggregate intrinsic value of options outstanding as of June 30, 2021 was $19,208.

Restricted Common Stock

In January 2021, the Company granted 152,671 shares of the Company’s common stock to the Company’s Chief Executive Officer (“CEO”). The shares vest on the first anniversary of the award. If the CEO’s employment with the Company is terminated for any reason, any shares not then vested will be forfeited. Also effective in January 2021, the Company granted 41,667 shares of the Company’s common stock to a consultant for services, with 4,167 of the shares vesting immediately and the balance of 37,500 shares vesting through August 15, 2021. In the event the consultant’s service with the Company terminates, any shares not then vested will be forfeited. During the quarter ended June 30, 2021 the Company granted 50,000 shares of the Company’s common stock with vesting terms to the Company’s Chief Commercial Officer. The shares vest one third per year for three years on the anniversary of the award.

The total fair value of the 244,338 shares was determined to be $742,912 based on the price per shares of the Company’s common stock on the dates granted. The Company accounts for the share awards using the straight-line attribution or graded vesting method over the requisite service period provided that the amount of compensation cost recognized at any date is no less than the portion of the grant-date fair value of the award that is vested at that date. During the six months ended June 30, 2021, total share-based expense recognized related to vested restricted shares totaled $365,295. At June 30, 2021, there was $1,035,796 of unvested compensation related to these awards that will be amortized over a remaining vesting period of 3.3 years.

The following table summarizes restricted common stock activity for the six months ended June 30, 2021:

	Number of shares			Fair value of shares
Non-vested shares, December 31, 2020		30,000		$	1.41
Granted		202,671			3.95
Vested		(22,500	)		(1.41	)
Forfeited
Non-vested shares, June 30, 2021		210,171		$	3.00

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11. Related Party Transactions

David Evans, Ph.D., was the interim chief executive officer of the Company from June 12, 2020 to January 6, 2021, and together with his spouse, wholly owns Ceatus Media Group LLC (“Ceatus”) and DWT Evans LLC (“DWT”). For the three months and six months ended June 30, 2021 and 2020 the Company paid Ceatus $19,500 and $13,750, and $42,000 and $27,500, respectively, for services related to digital marketing for the Company. The Company’s wholly owned subsidiary, VectorVision Ocular Health, leases office and warehouse space from DWT. For the six months ended June 30, 2021 and 2020, the Company paid DWT rent in the amounts of $11,142 and $10,708, respectively

In September 2017, the Company acquired VectorVision, Inc. from David Evans. At the same time, the Company also acquired AcQviz from David Evans, which is a patented methodology for auto-calibrating and standardizing the testing light level for computer generated vision testing systems. David Evans is entitled to receive a royalty on net revenue from AcQviz. As part of the development of the CSV-2000, AcQviz was embedded in the product by Radiant Technologies, Inc. in exchange for a 3% royalty on the sales of AcQviz. Radiant Technologies is owned by Joseph Evans, the brother of David Evans. During the three months and six months ended June 30, 2021 and 2020, the Company did not incur any royalties with respect to revenues from AcQviz.

12. Segment Reporting

The Company determined its reporting units in accordance with ASC 280, “Segment Reporting”. The Company currently operates in two reportable segments: Clinical Nutrition and Diagnostics Equipment.

The Clinical Nutrition segment provides a portfolio of science-based, clinically supported nutrition, medical foods, and supplements. The Diagnostics Equipment segment includes a portfolio of medical diagnostic devices currently focused on the ocular space and contrast testing. The Company’s diagnostics equipment and accessories are used to measure visual function and certain anatomical features of the eye that detect early disease and monitor changes over time.

The segments are based on the discrete financial information reviewed by the Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), to make resource allocation decisions and to evaluate performance. The reportable segments are each managed separately because they manufacture and distribute distinct products or provide services with different processes. All reported segment revenues are derived from external customers.

The accounting policies of the Company’s reportable segments are the same as those described in the summary of significant accounting policies (see Note 2). Certain corporate general and administrative expenses, including general overhead functions such as information systems, accounting, human resources, Board of Director fees, corporate legal fees, other compliance costs and certain administrative expenses, as well as interest and tax expense, are not allocated to the segments. The following tables set forth our results of operations by segment:

	For the Three Months Ended June 30, 2021
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	-		$	1,171,445		$	52,275		$	1,223,720
Cost of goods sold		-			639,188			26,031			665,219
Gross profit		-			532,257			26,244			558,501
Stock compensation expense		343,092			-			-			343,092
Operating expenses		2,759,319			1,938,799			57,845			4,755,963
Loss from operations	$	(3,102,411	)	$	(1,406,542	)	$	(31,601	)	$	(4,540,554	)

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	For the Three Months Ended June 30, 2020
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	2,700		$	1,152,894		$	35,315		$	1,190,909
Cost of goods sold		1,096			628,205			15,278			644,579
Gross profit		1,604			524,689			20,037			546,330
Stock compensation expense		(1,335,441	)		-			-			(1,335,441	)
Operating expenses		1,423,869			1,072,508			93,620			2,589,997
Loss from operations	$	(86,824	)	$	(547,819	)	$	(73,583	)	$	(708,226	)

	For the Six Months Ended June 30, 2021
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	-		$	1,333,588		$	123,429		$	1,457,017
Cost of goods sold		-			724,105			74,150			798,255
Gross profit		-			609,483			49,279			658,762
Stock compensation expense		730,707			-			-			730,707
Operating expenses		3,909,898			3,114,926			113,310			7,138,134
Loss from operations	$	(4,640,605	)	$	(2,505,443	)	$	(64,031	)	$	(7,210,079	)

	For the Six Months Ended June 30, 2020
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	6,100		$	1,304,028		$	126,505		$	1,436,633
Cost of goods sold		2,477			695,291			55,920			753,688
Gross profit		3,623			608,737			70,585			682,945
Stock compensation expense		(831,573	)		-			-			(831,573	)
Operating expenses		1,004,484			3,344,411			210,070			4,558,965
Loss from operations	$	(169,288	)	$	(2,735,674	)	$	(139,485	)	$	(3,044,447	)

The following tables set forth our total assets by segment. Intersegment balances and transactions have been removed:

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	As of June 30, 2021
	Corporate		Clinical Nutrition		Diagnostics Equipment		Total
Current assets
Cash	$	5,502,411	$	-	$	-	$	5,502,411
Short-term investments		7,000,266		-		-		7,000,266
Inventories		-		835,643		120,616		956,259
Accounts receivable		-		1,857,952		26,830		1,884,782
Other		-		1,072,918		130,251		1,203,169
Total current assets		12,502,677		3,766,513		277,697		16,546,887
Right of use asset, net		-		304,961		34,301		339,262
Property and equipment, net		-		113,945		131,766		245,711
Intangible assets, net		-		11,850,833		-		11,850,833
Goodwill		-		11,988,050		-		11,988,050
Other		-		314,082		-		314,082
Total assets	$	12,502,677	$	28,338,384	$	443,764	$	41,284,825

	As of December 31, 2020
	Corporate		Clinical Nutrition		Diagnostics Equipment		Total
Current assets
Cash	$	8,518,732	$	-	$	-	$	8,518,732
Inventories		-		254,879		130,093		384,972
Other		-		89,333		101,846		191,179
Total current assets		8,518,732		344,212		231,939		9,094,883
Right of use asset		-		374,447		44,143		418,590
Property and equipment, net		-		135,641		150,035		285,676
Intangible assets, net		-		50,000		-		50,000
Other		-		11,751		-		11,751
Total assets	$	8,518,732	$	916,051	$	426,117	$	9,860,900

13. Commitments and Contingencies

The Company is periodically the subject of various pending or threatened legal actions and claims arising out of its operations in the normal course of business. In the opinion of management of the Company, adequate provision has been made in the Company’s financial statements at June 30, 2021 and December 31, 2020 with respect to any such matters.

Effective January 6, 2021, the Board of Directors appointed Bret Scholtes as President, Chief Executive Officer, and as a director of the Company. The Company and Mr. Scholtes entered into an employment agreement pursuant to which Mr. Scholtes’ annual base salary is $400,000. The employment agreement provides that Mr. Scholtes shall have an annual target cash bonus of no less than $400,000 based on performance objectives determined by the Board of Directors.

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Additionally, Mr. Scholtes shall be granted (i) stock options equal to 2% of the Company’s issued and outstanding shares of common stock on the date of grant if the Company achieves certain specified performance objectives established by the Board of Directors for the Company’s fiscal years ending December 31, 2021, and December 31, 2022, and (ii) additional stock options equal to either 2% or 3% of the Company’s issued and outstanding shares of common stock on the date of grant if the Company meets certain financial objectives during the first five years following January 6, 2021. If Mr. Scholtes’ employment is terminated by the Company without cause, as defined under his employment agreement, if the term expires after a notice of non-renewal is delivered by the Company, or if Mr. Scholtes’ employment is terminated following a change of control, as defined, Mr. Scholtes will be entitled to (a) twelve months’ base salary, (b) the prorated portion of the any bonus, based on actual performance, and (c) base salary and benefits accrued through the date of termination.

14. Subsequent Events

The Company performed an evaluation of subsequent events through the date of filing of these consolidated financial statements with the SEC. There were no material subsequent events which affected, or could affect, the amounts or disclosures in the consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the six-month period ended June 30, 2021 contains “forward-looking statements” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements contain information about our expectations, beliefs or intentions regarding our product development and commercialization efforts, business, financial condition, results of operations, strategies or prospects, and other similar matters. These forward-looking statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. These statements may be identified by words such as “expects,” “plans,” “projects,” “will,” “may,” “anticipates,” “believes,” “should,” “intends,” “estimates,” “hopes” and other words of similar meaning.

Actual results could differ materially from those contained in forward-looking statements. Many factors could cause actual results to differ materially from those in forward-looking statements, including those matters discussed below. Readers are urged to read the risk factors set forth in the Company’s recent filings with the U. S. Securities and Exchange Commission (the “SEC”), including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and in other documents the Company files with the SEC from time to time. These filings are available at the SEC’s website (www.sec.gov).

Other unknown or unpredictable factors that could also adversely affect our business, financial condition and results of operations may arise from time to time. Given these risks and uncertainties, the forward-looking statements discussed in this report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of the Company’s management as of the date of this report. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results or expectations, except as required by law.

Presentation of Information

As used in this Quarterly Report on Form 10-Q, the terms “we,” “us” “our” and the “Company” mean Guardion Health Sciences, Inc., and its affiliates unless the context requires otherwise. The following discussion and analysis should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this report and our audited financing statements for the year ended December 31, 2020, and the notes thereto, which are set forth in the Company’s 2020 Annual Report on Form 10-K. All dollar amounts refer to U.S. dollars unless otherwise indicated.

Overview

Guardion Health Sciences, Inc., a Delaware corporation (the “Company” or “we”) is a clinical nutrition and diagnostics company that develops and distributes clinically supported nutrition, medical foods, supplements and medical devices. The Company offers a portfolio of science-based, clinically supported products and devices designed to support healthcare professionals and providers, and their patients and consumers.

We see opportunities to grow our business and create value by acquiring, developing and distributing condition-specific, clinically proven nutrition, medical foods, supplements and diagnostic devices. We see opportunities to grow our business and create value by developing and distributing condition-specific, clinically proven nutrition, medical foods, supplements and diagnostic devices. Our portfolio of science-based, clinically supported products support healthcare professionals, their patients, and consumers in achieving health goals.

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The Company’s profile and focus fundamentally changed with the acquisition of Activ Nutritional, LLC in June 2021, (“Activ”), the owner and distributor of the Viactiv® line of chewable mineral supplements for bone health, immune health and other applications.

The acquisition and integration of the Viactiv line of products has changed the Company’s financial position, market profile and brand focus, and has also expanded the Company’s search for additional business opportunities in the short-term, both internal and external.

The Company believes the Viactiv acquisition adds valuable attributes, including (1) Viactiv’s brand awareness and acceptance from the consumer; (2) experienced management; (3) established distribution networks and relationships; (4) product development potential; and (5) a long track record of revenue growth and profitability.

● Brand awareness - Viactiv was initially launched by industry leaders Mead Johnson/Johnson &Johnson approximately twenty years ago, and we believe this history, along with the product’s marketing campaigns, taste profile and receipt of consistently positive consumer reviews, have led to strong consumer awareness and acceptance.

● Experienced management – As part of the Activ acquisition the Company appointed Craig Sheehan as the Chief Commercial Officer. Mr. Sheehan was the senior executive responsible for the Viactiv brand as a member of the executive leadership team of Adare Pharmaceuticals.

● Established distribution – Viactiv’s products are currently marketed through many of the nation’s largest retailers, including, among others, Walmart (retail and online), Target, CVS and Amazon.

● Product development potential – The Viactiv brand has promising organic growth potential through expanded product development, increased marketing programs, and line extensions. Viactiv recently launched its Calcium Plus Immune product and there are other complementary products in development that the Company is considering bring to market. Track record of profitability – Viactiv generated net revenues of approximately $11,900,000 in 2020 and operating income of approximately $1,200,000 in 2020. For the three months and six months ended June 30, 2021, on a pro forma basis, Guardion’s total revenues would have been $3,137,736 and $7,273,595, respectively, and the Viactiv products would have accounted for 94% and 94%, respectively, of Guardion’s pro forma total revenues for those periods. The Company expects the acquisition of Viactiv to contribute increasing revenue and consistent operating margins and profitability, as well as a multitude of growth opportunities, to the Company.

Recent Developments

Acquisition of Activ Nutritional

On June 1, 2021, the Company completed its previously announced acquisition of Activ. The acquisition was made pursuant to an Equity Purchase Agreement dated May 18, 2021, between the Company, Adare Pharmaceuticals, Inc., (“Adare”), and Activ. . The Company acquired all of the issued and outstanding shares of Activ from Adare for $26 million in cash, subject to certain adjustments as provided in the Equity Purchase Agreement.

Activ owns the Viactiv® line of supplement chews for bone health, immune health and other applications which are currently marketed through many of the nation’s largest retailers, including, among others, Walmart (retail and online), Target and Amazon. The Viactiv product lines will become the Company’s most prominent product lines for the foreseeable future.

The Company utilized the acquisition method of accounting for the acquisition in accordance with ASC 805, Business Combinations. The Company allocated the purchase price to Activ’s tangible assets, identifiable intangible assets, and assumed liabilities at their estimated fair values as of the date of acquisition. The fair value of the intangible assets was estimated using the income approach in which after-tax cash flows are discounted to present value by a third-party valuation firm based on projections and financial data provided by management of the Company. The cash flows are based on estimates used to value the acquisition, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model as well as the weighted average cost of capital. The valuation assumptions take into consideration our estimates of customer attrition and revenue growth projections. The excess of the purchase price paid by the Company over the estimated fair value of identified tangible and intangible assets has been recorded as goodwill.

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Appointment of CEO

Effective as of January 6, 2021, the Board of Directors appointed Bret Scholtes as President and Chief Executive Officer and as a director of the Company.

The Company and Mr. Scholtes entered into an employment agreement pursuant to which Mr. Scholtes’ annual base salary is $400,000. The Employment Agreement provides that Mr. Scholtes shall have an annual target cash bonus opportunity of no less than $400,000 (the “Bonus”) based on the achievement of Company and individual performance objectives to be determined by the Board of Directors.

Mr. Scholtes was granted an award of stock options equal to one percent (1%) of the issued and outstanding number of shares of the Company’s common stock (the “Stock Options”) pursuant to the Company’s 2018 Equity Incentive Plan (the “Incentive Plan”), at an exercise price equal to the closing price of the Company’s common stock on the Effective Date (152,671 shares, exercise price of $3.95 per share). One third (1/3) of the Stock Options shall vest and become exercisable the first anniversary of the Effective Date, and the balance of the Stock Options shall vest ratably in equal installments for the twenty-four (24) months thereafter, subject to continued service, and shall vest in full upon a Change in Control (as defined in the Incentive Plan). Additionally, the Company shall grant unvested shares of common stock in an amount equal to one percent (1%) of the number of shares of Company common stock issued and outstanding on the Effective Date (the “Stock Grant”) to Mr. Scholtes under the Incentive Plan (152,671 shares). The shares underlying the Stock Grant shall become vested in full on the first anniversary of the Effective Date. Additionally, Mr. Scholtes shall be granted (i) additional stock options equal to two percent (2%) of the Company’s issued and outstanding shares of common stock on the date of grant if the Company achieves certain specified written performance objectives established by the Board for the Company’s fiscal years ending December 31, 2021 and December 31, 2022 and (ii) additional stock options equal to either two percent (2%) or three percent (3%) of the Company’s issued and outstanding shares of common stock on the date of grant if the Company meets certain financial objectives during the first five years following the Effective Date.

If Mr. Scholtes’ employment is terminated by the Company without cause (as defined in his employment agreement), if the term expires after a notice of non-renewal is delivered by the Company or if Mr. Scholtes’ employment is terminated following a change of control (as defined in the Incentive Plan), Mr. Scholtes will be entitled to (a) twelve months’ base salary, (b) the prorated portion of the Bonus for the year in which the termination occurs, based on actual performance and (c) base salary and benefits accrued through the date of termination.

January and February 2021 At the Market Offerings

On January 8, 2021, the Company entered into a sales agreement with Maxim Group LLC (“Maxim”) pursuant to which the Company could sell up to $10,000,000 worth of shares of its common stock in an “at the market” offering through Maxim (the “January 2021 1st ATM Offering”). On January 15, 2021, the Company completed the January 2021 1st ATM Offering, pursuant to which the Company sold an aggregate of 2,559,834 shares of its common stock and raised gross proceeds (after deduction for sales commissions) of approximately $9,700,000.

On January 28, 2021, the Company entered into a sales agreement with Maxim pursuant to which the Company could sell up to $25,000,000 worth of shares of its common stock in an “at the market” offering through Maxim (the “January 2021 2nd ATM Offering”). On February 10, 2021, the Company completed the January 2021 2nd ATM Offering, pursuant to which the Company sold an aggregate of 5,048,840 shares of its common stock and raised gross proceeds (after deduction for sales commissions) of approximately $24,250,000.

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The Company incurred costs related to these financings of approximately $327,000 which are reflected in APIC as a reduction that offsets to the proceeds for shares issued. The net cash received from both offering after all expense is approximately $33,623,000.

Warrant Exercises

From January 1, 2021 through June 30, 2021, the Company received total gross proceeds of $3,568,415 from the exercise of 1,647,691 warrants issued.

Recent Accounting Pronouncements

See Note 2 to the condensed consolidated financial statements for management’s discussion of recent accounting pronouncements.

Concentration of Risk

Cash balances are maintained at large, well-established financial institutions. At times, cash balances exceed federally insured limits. Insurance coverage limits are $250,000 per depositor at each financial institution. The Company has never experienced any losses related to these balances.

During the six months ended June 30, 2021, two customers accounted for approximately 44% of the Company’s sales. No other customer accounted for more than 10% of such sales in either the 2021 or 2020 six-month periods.

Critical Accounting Policies and Estimates

The Company’s financial statements have been prepared in conformity with GAAP. The preparation of its financial statements in conformity with GAAP requires management to make certain 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 reported amounts of expenses during the reporting period. Actual results could differ from those estimates. The Company’s financial statements included herein include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows.

The following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Company’s financial statements.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. Revenue is recognized when control of promised goods or services is transferred to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those products or services. The Company reviews its sales transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable.

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.

Inventories

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out (“FIFO”) basis. The Company records adjustments to its inventory for estimated obsolescence or diminution in net realizable value equal to the difference between the cost of the inventory and the estimated net realizable value. The difference is recognized as a loss in the period in which it occurs. Once inventory has been written down, it creates a new cost basis for inventory that is not subsequently written up.

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Business Combinations

The Company accounts for its business combinations using the acquisition method of accounting where the purchase consideration is allocated to the tangible and intangible assets acquired, and liabilities assumed, based on their respective fair values as of the acquisition date. The excess of the fair value of the purchase consideration over the estimated fair values of the net assets acquired is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth and margins, future changes in technology, expected cost and time to develop in-process research and development, brand awareness and discount rates. Fair value estimates are based on the assumptions that management believes a market participant would use in pricing the asset or liability.

Stock-Based Compensation

The Company periodically issues stock-based compensation to employees and non-employees in non-capital raising transactions for services and for financing costs. Such grants vest and expire according to terms established at the issuance date. The Company accounts for such grants issued and vesting based on ASC 718, Compensation-Stock Compensation, whereby the value of the award is measured on the date of grant and recognized for employees as compensation expense on a straight-line or graded basis over the vesting period. Recognition of compensation expense for non-employees is 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. The Company periodically issues stock-based compensation to officers, directors, contractors and consultants for services rendered. Such issuances vest and expire according to terms established at the issuance date.

Recent Trends – Market Conditions; COVID-19

The COVID-19 pandemic has and will continue affecting economies and businesses around the world. The impacts of the pandemic could be material, but due to the evolving nature of this situation, we are not able at this time to estimate the impact on our financial or operational results. Among the factors that could impact our results are the effectiveness of COVID-19 mitigation and vaccination measures; the development of COVID-19 variants, global economic conditions; consumer spending; work from home trends; supply chain sustainability; and other factors. These factors could result in increased or decreased demand for our products and services and impact our ability to serve customers.

Plan of Operations

General Overview

The Company is focused on building a leading clinical nutrition company with the objective that it become a top performing growth company. Our team has taken the first part of 2021 to assess the business, the core fundamentals, and the market opportunity for the Company’s products and services. With the acquisition of Activ, management believes that the Company will be able to accelerate its growth and development.

Our team is focused on building a strong foundation by developing a business model and infrastructure that are designed for long-term commercial success. This process will take time, but we are taking important steps required to build a stronger company, such as the Activ acquisition. Furthermore, we successfully raised equity in two at-the-market equity financings during the first three months ended March 31, 2021, and the Company implemented a reverse stock split that enabled us to come into full compliance with Nasdaq’s continued listing rules regarding minimum bid stock price. Based on the availability of sufficient funding, the Company intends to increase its commercialization and business development activities, including engaging in further strategic acquisitions, to capitalize on growth opportunities.

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Over the long-term, we believe one of the critical keys to our success will be to create value in well-differentiated and robust brands through strong clinically proven claims that address consumer needs in growing markets, both domestically and internationally. We are committed to bringing compelling products to market under meaningful and differentiated brands supported by strong science.

We are currently working on a number of initiatives required to achieve these long-term goals. These include the following:

Growth initiatives focused on increasing revenue and bringing compelling products to market under meaningful and differentiated brands that are supported by strong science.

● Brand Strategy – Brands are an important part of our strategy, and Guardion’s team is evaluating the best ways to manage its brand portfolio. In particular, we are seeking to develop a strategy that best leverages Viactiv’s strong consumer awareness and acceptance.

● Scientific Work – Our team continuously evaluates scientific journals and clinical evidence to improve the science behind our existing products and drive our product development process. In addition, we are working with health care professionals to increase clinical evidence on existing products.

● Product Strategy – Our team is evaluating our current product portfolio and seeking opportunities to improve or discontinue our existing products and technologies and develop new ones. We are focused on differentiated formulations, product taste, compelling product formats, and competitive cost structures.

● Sales Channels – Our team is evaluating opportunities to increase product commercialization through better access to sales channels. The Viactiv products enjoy established distribution through traditional retailers and third-party eCommerce retailers. Our other clinical nutrition products are sold directly to consumers via the Company’s website. By leveraging our collective experience selling in these channels, we seek to increase the distribution of our products.

● Existing Business Lines – Our team is evaluating the Company’s non-Viactiv business lines to determine their fit in the strategic direction of the Company. As discussed elsewhere and in our Annual Report on Form 10-K for the Year Ended December 31, 2020, product development and successful commercialization can be an expensive and time-consuming process. Management wants to focus on those products and technologies that possess the greatest chance for commercial success within a reasonable period of time and a reasonable deployment of capital.

Efficiency initiatives focused on increased profitability

● Logistics – Our team is evaluating the way our products are handled, stored and transported. We believe there could be opportunities to become more efficient and potentially reduce warehouse costs.

● Office costs – We have moved our executive offices to Houston, Texas. We are evaluating options to decrease our costs as a result of this relocation, and the Company’s successful use of virtual management.

● Portfolio evaluation – We are evaluating our entire product portfolio with the goal to identify efficiencies and insuring fit with the Company’s strategy.

● Information Technology – Our team is implementing a number of information technology projects designed to increase efficiency and marketing effectiveness, and to manage risk.

Results of Operations

Through June 30, 2021, the Company has primarily been engaged in product development, commercialization, and raising capital. The Company has incurred and will continue to incur significant expenditures for the development of its products and intellectual property, which includes nutrition, medical foods, supplements and Diagnostics Equipment. These products support healthcare professionals, their patients and consumers in achieving health goals. The Company had limited revenue during the three and six months ended June 30, 2021 and 2020.

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Comparison of Three Months Ended June 30, 2021 and 2020

	Three Months Ended June 30,
	2021			2020			Change
Revenue	$	1,223,720		$	1,190,909		$	32,811		3	%
Cost of goods sold		665,219			644,579			20,640		3	%
Gross Profit		558,501			546,330			12,171		2	%
Operating Expenses:
Research and development		16,756			44,581			(27,825	)	(62	)%
Sales and marketing		440,793			519,067			(78,274	)	(15	)%
General and administrative		2,537,826			1,712,183			825,643		48	%
Acquisition transaction costs		2,103,680			-			2,103,680
Costs related to resignation of former officer		-			(1,052,223	)		1,052,223
Impairment loss on equipment held for sale		-			30,948			(30,948	)
Total Operating Expenses		5,099,055			1,254,556			3,844,499		306	%
Loss from Operations		(4,540,554	)		(708,226	)		(3,832,328	)	541	%
Other Expense (Income):
Interest expense		-			1,790			(1,790	)	(100	)%
Interest income		(266	)		-			(266	)
Change in fair value of derivative warrants		-			(2,856	)		2,856		(100	)%
Net Loss	$	(4,540,288	)	$	(707,160	)	$	(3,833,128	)	(542	)%

Revenue

For the three months ended June 30, 2021, revenue from product sales was $1,223,720 compared to $1,190,909 for the three months ended June 30, 2020, resulting in an increase of $32,811 or 3%. The relatively flat overall performance reflects a combination of improved sales of Clinical Nutrition resulting from our acquisition of Activ Nutritional, LLC, offset by a decrease in Diagnostics Equipment sales primarily due to the impact of COVID-19 office closures for many in our customer base. Activ was acquired on June 1, 2021 and contributed $1,049,803 of revenue in the one month it was part of the Company during the period ended June 30, 2021. This contribution represented 86% of the Company’s revenue during the quarter. For the three months ended June 30, 2021, on a proforma basis, the amount of revenue from Activ we would have included in our consolidated results was $2,842,177.

Cost of Goods Sold

For the three months ended June 30, 2021, cost of goods sold was $665,219 compared to $644,579 for the three months ended June 30, 2020, an increase of $20,640 or 3%. This increase is primarily driven by the addition of the Viactiv product line to our offerings.

Gross Profit

For the three months ended June 30, 2021, gross profit was $558,501 compared to $546,330 for the three months ended June 30, 2020, an increase of $12,171 or 2%, primarily as a result in the decrease in Diagnostics Equipment sales and the increase in cost of goods sold. Gross profit represented 46% of revenues in each three-month period ended June 30. Activ was acquired on June 1, 2021 and contributed $503,073 of gross profit in the one month it was part of the Company. This contribution represented 90% of the Company’s gross profit during the quarter.

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Research and Development

For the three months ended June 30, 2021, research and development costs were $16,756 compared to $44,581 for the three months ended June 30, 2020, a decrease of $27,825 or 62%, primarily as a result of the timing of certain studies conducted on a periodic basis. Research and development costs primarily consist of engineering efforts related to our Diagnostics Equipment and clinical studies related to our medical foods.

Sales and Marketing

For the three months ended June 30, 2021, sales and marketing expenses were $440,793 as compared to $519,067 for the three months ended June 30, 2020, representing a decrease in sales and marketing expenses of $78,274 or 15% compared to the prior three-month period. The decrease is primarily attributable to increases in marketing and advertising of approximately $187,000 partially offset by decreases in payroll and stock compensation of approximately $233,000 which in previous years allocated to Sales and Marketing which is now in general and administrative costs and a decrease in postage costs of approximately $20,000.

General and Administrative

For the three months ended June 30, 2021, general and administrative expenses were $2,537,826 as compared to $1,712,183 for the three months ended June 30, 2020. The increase of $825,643 or 48% compared to the prior period was primarily attributable increases in stock-based compensation increased approximately $767,000 and professional fees of approximately $409,000, offset primarily by a decrease in payroll costs of approximately $268,000.

Acquisition Transaction Costs

For the three months ended June 30, 2021, acquisition transaction costs were $2,103,680 all of which relate to our acquisition of Activ. We did not have any acquisition costs in the comparable three-month period in 2020.

Costs Related to Resignation of Former Officer

Effective June 15, 2020, Michael Favish resigned as Chief Executive Officer and as an employee of the Company and resigned from the Company’s Board of Directors. Terms of the settlement agreement included the continuation of his previous salary of $325,000 during the following twelve months. The $325,000 settlement was recorded in costs related to resignation of former officer expense in the accompanying condensed consolidated statement of operations for the three months ended June 30, 2020.

In connection with his separation, the expiration date of his vested stock options was extended for twelve months from June 15, 2020. In accordance with ASC 718, the extension of the exercise period for the vested options constitutes a modification of the original option agreement. In accounting for the modification, the Company calculated the fair value of the vested options immediately before modification using current valuation inputs including the Company’s closing stock price of $0.49 on June 15, 2020, a volatility metric of 142%, and a risk-free interest rate of 0.22%. The Company also calculated the fair value of the vested options immediately following the modification using the extended 12-month exercise period. An incremental stock compensation charge of $24,359 was recorded in costs related to resignation of former officer.

Mr. Favish’s unvested options at the time of his separation were forfeited. All compensation from prior periods related to these unvested options was reversed, resulting in an adjustment to stock compensation expense during the three months ended June 30, 2020 of $(1,401,582) that was recorded in costs related to resignation of former officer.

Impairment Loss on Equipment Held for Sale

During June 2020, in an effort to reduce costs, the Company began to wind down the TDSI subsidiary. The wind down was completed in the third quarter of 2020. TDSI holds a group of ultrasound machines as fixed assets. We intend to sell these machines, and therefore have reflected their value as the lower of carrying value or fair value less estimated selling costs. An impairment charge of $30,948 has been recorded in the condensed consolidated statements of operations for the three months ended June 30, 2020. No impairment charge was recorded for the three months ended June 30, 2021.

Interest Expense

For the three months ended June 30, 2021, interest expense was $0 compared to $1,790 for the three months ended June 30, 2020. In 2020 we financed the cost of various insurance policies and incurred interest expense. We did not finance the cost of the 2021 insurance policies therefore we incurred no interest in the quarter ended June 30, 2021.

Net Loss

For the three months ended June 30, 2021, the Company incurred a net loss of $4,540,288, compared to a net loss of $707,160 for the three months ended June 30, 2020. The increase in net loss of $3,833,128 or 542% compared to the prior year period is primarily attributable to the increase in costs of goods sold, general and administrative costs and acquisition transaction costs described above.

Segment Information

The following tables set forth our results of operations by segment:

The Clinical Nutrition segment’s Viactiv® line of supplement chews for bone health, immune health and other applications are currently marketed through many of the nation’s largest retailers, including, among others, Walmart (retail and online), Target and Amazon. The Company believes the Viactiv product lines will become the Company’s most prominent product lines. Our other products in the Clinical Nutrition segment include Lumega-Z, GlaucoCetin and ImmuneSF.

The Diagnostics Equipment segment includes a portfolio of medical diagnostic devices currently focused on the ocular space and is the industry leader in contrast testing. Our products include VectorVision CSV-1000, CSV-1000HGT, CSV-2000 and associated accessories as well as the MapcatSF.

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See Note 12 to the condensed consolidated financial statements for further details on our reportable segments.

	For the Three Months Ended June 30, 2021
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	-		$	1,171,445		$	52,275		$	1,223,720
Cost of goods sold		-			639,188			26,031			665,219
Gross profit		-			532,257			26,244			558,501
Stock compensation expense		343,092			-			-			343,092
Operating expenses		2,759,319			1,938,799			57,845			4,755,963
Loss from operations	$	(3,102,411	)	$	(1,406,542	)	$	(31,601	)	$	(4,540,554	)

	For the Three Months Ended June 30, 2020
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	2,700		$	1,152,894		$	35,315		$	1,190,909
Cost of goods sold		1,096			628,205			15,278			644,579
Gross profit		1,604			524,689			20,037			546,330
Stock compensation expense		(1,335,441	)		-			-			(1,335,441	)
Operating expenses		1,423,869			1,072,508			93,620			2,589,997
Loss from operations	$	(86,824	)	$	(547,819	)	$	(73,583	)	$	(708,226	)

Revenue

For the three months ended June 30, 2021, revenue from our Clinical Nutrition segment was $1,171,445 compared to $1,152,894 for the three months ended June 30, 2020, an increase of $18,551 or 2%. For the three months ended June 30, 2021, revenue from our Diagnostics Equipment segment was $52,275 compared to $35,315 for the three months ended June 30, 2020, an increase of $16,960 or 48% primarily due to the sale of MapcatSF devices in first quarter of 2020.

Cost of Goods Sold

For the three months ended June 30, 2021, cost of goods sold from our Clinical Nutrition segment was $639,188 as compared to $628,205 for the three months ended June 30, 2020, an increase of $10,983 or 2%. For the three months ended June 30, 2021, cost of goods sold from our Diagnostics Equipment segment was $26,031 as compared to $15,278 for the three months ended June 30, 2020, an increase of $10,753 or 70%.

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Gross Profit

For the three months ended June 30, 2021, gross profit from the Clinical Nutrition segment was $532,257 compared to $524,689 for the three months ended June 30, 2020, an increase of $7,568 or 1 %. For the three months ended June 30, 2021, gross profit from the Diagnostics Equipment segment was $26,244 as compared to $20,037 for the three months ended June 30, 2020, resulting in a decrease of $6,207 or 31%. Gross profit overall represented 46% of revenues for the three months ended June 30, 2021and 46% of revenues for the three months ended June 30, 2020.

Comparison of Six Months Ended June 30, 2021 and 2020

	Six Months Ended June 30,
	2021			2020			Change
Revenue	$	1,457,017		$	1,436,633		$	20,384		1	%
Cost of goods sold		798,255			753,688			44,567		6	%
Gross Profit		658,762			682,945			(24,183	)	(4	)%
Operating Expenses:
Research and development		37,364			75,769			(38,405	)	(51	)%
Sales and marketing		898,520			1,007,913			(109,393	)	(11	)%
General and administrative		4,829,277			3,228,698			1,600,579		50	%
Acquisition transaction costs		2,103,680			-			2,103,680
Costs related to resignation of former officer		-			(615,936	)		615,936		(100	)%
Impairment loss on equipment held for sale		-			30,948			(30,948	)	(100	)%
Total Operating Expenses		7,868,841			3,727,392			4,141,449		111	%
Loss from Operations		(7,210,079	)		(3,044,447	)		(4,165,632	)	137	%
Other Expense (Income):
Interest expense		-			-			-		-	%
Interest income		(266	)		-			(266	)
Change in fair value of derivative warrants		-			6,088			(6,088	)	(100	)%
Net Loss	$	(7,209,813	)	$	(3,054,073	)	$	(4,155,740	)	136	%

Revenue

For the six months ended June 30, 2021, revenue from product sales was $1,457,017 compared to $1,436,633 for the six months ended June 30, 2020, resulting in an increase of $20,384 or 1%. The relatively flat overall performance reflects a combination of improved sales of Clinical Nutrition a direct result of our acquisition and integration of Activ partially offset by a decrease in Diagnostics Equipment sales primarily due to the impact of COVID-19 office closures for many in our customer base. For the six months ended June 30, 2021, on a proforma basis, the amount of revenue from Activ we would have included in our consolidated results was $6,582,596.

Cost of Goods Sold

For the six months ended June 30, 2021, cost of goods sold was $798,255 compared to $753,688 for the six months ended June 30, 2020, an increase of $44,567 or 6%. This increase is primarily driven by a change in product mix as the result of our acquisition and integration of Activ. During the six months ended June 30, 2021, the Company recorded an inventory write down of approximately $6,000 related to Vector Vision raw materials inventory.

Gross Profit

For the six months ended June 30, 2021, gross profit was $658,762 compared to $682,945 for the six months ended June 30, 2020, a decrease of $24,183 or 4%, primarily as a result in the decrease in Diagnostics Equipment sales and the increase in cost of goods sold resulting from the acquisition and integration of Activ. Gross profit represented 46% of revenues for the six months ended June 30, 2021, versus 48% of revenue for the six months ended June 30, 2020.

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Research and Development

For the six months ended June 30, 2021, research and development costs were $37,364 compared to $75,769 for the six months ended June 30, 2020, a decrease of $38,405 or 51%, primarily as a result of the timing of certain studies conducted on a periodic basis. Research and development costs primarily consist of engineering efforts related to our Diagnostics Equipment and clinical studies related to our medical foods.

Sales and Marketing

For the six months ended June 30, 2021, sales and marketing expenses were $898,520 as compared to $1,007,913 for the six months ended June 30, 2020, representing a decrease in sales and marketing expenses of $109,393 or 11% compared to the prior six-month period.

General and Administrative

For the six months ended June 30, 2021, general and administrative expenses were $4,829,277 as compared to $3,228,698 for the six months ended June 30, 2020. The increase of $1,600,579 or 50% compared to the prior period. was primarily attributable to increases of approximately in professional fees of $178,000, an increase in stock-based compensation of $687,000, an increase in consulting fees of $303,000, an increase of $61,000 in Insurance, an increase in computer and internet costs of $64,000 partially offset by decreases of $48,000 in office expense and a decrease of $38,000 in corporate travel expenses.

Acquisition Transaction Costs

For the six months ended June 30, 2021, acquisition transaction costs were $2,103,680 all of which relate to our acquisition of Activ. We did not have any acquisition costs in the comparable six month period of 2020.

Costs Related to Resignation of Former Officer

Effective June 15, 2020, Michael Favish resigned as Chief Executive Officer and as an employee of the Company and resigned from the Company’s Board of Directors. Terms of the settlement agreement included the continuation of his previous salary of $325,000 during the following twelve months. The $325,000 settlement was recorded in costs related to resignation of former officer expense in the accompanying condensed consolidated statement of operations for the six months ended June 30, 2020.

In connection with his separation, the expiration date of his vested stock options was extended for twelve months from June 15, 2020. In accordance with ASC 718, the extension of the exercise period for the vested options constitutes a modification of the original option agreement. In accounting for the modification, the Company calculated the fair value of the vested options immediately before modification using current valuation inputs including the Company’s closing stock price of $0.49 on June 15, 2020, a volatility metric of 142%, and a risk-free interest rate of 0.22%. The Company also calculated the fair value of the vested options immediately following the modification using the extended 12-month exercise period. An incremental stock compensation charge of $24,359 was recorded in costs related to resignation of former officer.

Mr. Favish’s unvested options at the time of his separation were forfeited. All compensation from prior periods related to these unvested options was reversed, resulting in an adjustment to stock compensation expense during the six months ended June 30, 2020 of $(965,295) that was recorded in costs related to resignation of former officer.

Impairment Loss on Equipment Held for Sale

During June 2020, in an effort to reduce costs, the Company began to wind down the TDSI subsidiary. The wind down was completed in the third quarter of 2020. TDSI holds a group of ultrasound machines as fixed assets. We intend to sell these machines, and therefore have reflected their value as the lower of carrying value or fair value less estimated selling costs. An impairment charge of $30,948 has been recorded in the condensed consolidated statements of operations for the six months ended June 30, 2020. No impairment charge was recorded for the six months ended June 30, 2021.

35

Interest Expense

For the six months ended June 30, 2021, interest expense was $0 compared to $3,538 for the six months ended June 30, 2020. In 2020 we financed the cost of various insurance policies and incurred interest expense. We did not finance the cost of the 2021 insurance policies therefore we incurred no interest in the six months ended June 30, 2021.

Net Loss

For the six months ended June 30, 2021, the Company incurred a net loss of $7,209,813, compared to a net loss of $3,054,073 for the three months ended June 30, 2020. The increase in net loss of $4,155,740 or 136% compared to the prior year period is primarily attributable to the increase in costs of goods sold and general and administrative costs described above.

Segment Information

The following tables set forth our results of operations by segment:

The Clinical Nutrition segment provides a portfolio of science-based, clinically supported nutrition, medical foods, and supplements. Our products include, among others, Lumega-Z, GlaucoCetin and ImmuneSF.

The Diagnostics Equipment segment includes a portfolio of medical diagnostic devices currently focused on the ocular space and is the industry leader in contrast testing. Our products include VectorVision CSV-1000, CSV-1000HGT, CSV-2000 and associated accessories as well as the MapcatSF.

See Note 12 to the condensed consolidated financial statements for further details on our reportable segments.

	For the Six Months Ended June 30, 2021
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	-		$	1,333,588		$	123,429		$	1,457,017
Cost of goods sold		-			724,105			74,150			798,255
Gross profit		-			609,483			49,279			658,762
Stock compensation expense		730,707			-			-			730,707
Operating expenses		3,909,898			3,114,926			113,310			7,138,134
Loss from operations	$	(4,640,605	)	$	(2,505,443	)	$	(64,031	)	$	(7,210,079	)

	For the Six Months Ended June 30, 2020
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	6,100		$	1,304,028		$	126,505		$	1,436,633
Cost of goods sold		2,477			695,291			55,920			753,688
Gross profit		3,623			608,737			70,585			682,945
Stock compensation expense		(831,573	)		-			-			(831,573	)
Operating expenses		1,004,484			3,344,411			210,070			4,558,965
Loss from operations	$	(169,288	)	$	(2,735,674	)	$	(139,485	)	$	(3,044,447	)

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Revenue

For the six months ended June 30, 2021, revenue from our Clinical Nutrition segment was $1,333,588 compared to $1,304,028 for the six months ended June 30, 2020, an increase of $29,560 or 2%. For the six months ended June 30, 2021, revenue from our Diagnostics Equipment segment was $123,429 compared to $126,505 for the six months ended June 30, 2020, a decrease of $3,076 or 2%.

Cost of Goods Sold

For the six months ended June 30, 2021, cost of goods sold from our Clinical Nutrition segment was $724,105 as compared to $695,291 for the six months ended June 30, 2020, an increase of $28,814 or 4%. The increase was primarily due to the change in product mix for the Clinical Nutrition segment resulting from our acquisition of Activ. For the six months ended June 30, 2021, cost of goods sold from our Diagnostics Equipment segment was $74,150 as compared to $55,920 for the six months ended June 30, 2020, an increase of $18,230 or 33%. This increase is primarily driven by a change in product mix in the Diagnostics Equipment business.

Gross Profit

For the three months ended June 30, 2021, gross profit from the Clinical Nutrition segment was $609,483 compared to $608,737 for the six months ended June 30, 2020, an increase of $746 or less than 1%. For the six months ended June 30, 2021, gross profit from the Diagnostics Equipment segment was $49,279 as compared to $70,585 for the six months ended June 30, 2020, resulting in a decrease of $21,306 or 30%. Gross profit overall represented 45% of revenues for the six months ended June 30, 2021, versus 48% of revenue for the six months ended June 30, 2020.

Liquidity and Capital Resources

Since its formation in 2009, the Company has devoted substantial effort and capital resources to the development and commercialization activities related to its product candidates. For the six months ended June 30, 2021, the Company incurred a net loss of $7,209,813 and used cash in operating activities of $7,285,354. At June 30, 2021, the Company had cash on hand of $5,502,411, short term investments of $7,000,266, and working capital of $14,741,926. Notwithstanding the net loss for the half quarter of 2021, management believes that its current cash balance is sufficient to fund operations for at least the next twelve months.

The Company’s financing has historically come primarily from the issuance of convertible notes, promissory notes and from the sale of common and preferred stock. The Company will continue to incur significant expenses for continued commercialization activities related to its Clinical Nutrition product lines, Diagnostics Equipment, and building its infrastructure. Development and commercialization of Clinical Nutrition products and Diagnostics Equipment involves a lengthy and complex process. Additionally, the Company’s long-term viability and growth may depend upon the successful development and commercialization of new complementary products or product lines.

The Company may continue to seek to raise additional debt and/or equity capital to fund future operations and acquisitions as necessary, but there can be no assurances that the Company will be able to secure such additional financing in the amounts necessary to fully fund its operating requirements on acceptable terms or at all. Over time, if the Company is unable to access sufficient capital resources on a timely basis, the Company may be forced to reduce or discontinue its technology and product development programs and curtail or cease operations.

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Sources and Uses of Cash

The following table sets forth the Company’s major sources and uses of cash for each of the following periods:

	Six Months Ended June 30,
	2021			2020
Net cash used in operating activities	$	(7,285,354	)	$	(4,020,731	)
Net cash used in investing activities		(32,961,980	)		(40,733	)
Net cash provided by financing activities		37,231,013			4,549,421
Net (decrease) increase in cash	$	(3,016,321	)	$	487,957

Operating Activities

Net cash used in operating activities was $7,285,354 during the six months ended June 30, 2021, versus $4,020,731 used during the comparable prior year period. The increase over 2020 was due primarily to transaction costs associated with our acquisition of Activ, higher legal, insurance, professional services, paid in the current three-month period.

Investing Activities

Net cash used in investing activities was $32,961,980 for the three months ended June 30, 2021 and $40,733 for the six months ended June 30, 2020. The increase was primarily to fund the Activ acquisition in June 2021. Cash was used in the prior year period for the purchase of testing equipment, furniture and fixtures. There immaterial purchases of furniture, fixtures and equipment in the quarter ended June 30, 2021.

Financing Activities

Net cash provided by financing activities was $37,231,013 for the six months ended June 30, 2021 and consisted of the sale of common stock with net proceeds of $33,662,599 and warrant exercises during the period with proceeds of $3,568,414. Net cash provided by financing activities was $4,459,421 for the six months ended June 30, 2020 and is all attributable to the exercise of warrants.

Off-Balance Sheet Arrangements

At June 30, 2021 and December 31, 2020, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Accounting Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Securities and Exchange Act of 1934 Rules 13a-15(f). Based on this evaluation, our Chief Executive Officer and our Chief Accounting Officer concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2021. As of June 30, 2021, management’s assessment identified the following material weakness in the Company’s internal control over financial reporting:

Segregation of Duties – The Company did not maintain effective policies to ensure adequate segregation of duties within its accounting processes. Specifically, due to the size of the Company and the smaller nature of department teams, opportunities are limited to segregate duties, resulting in one individual having almost complete responsibility for the processing of certain financial information.

While we have designed and implemented, or expect to implement, measures that we believe address or will address this control weakness, we continue to develop our internal controls, processes and reporting systems by, among other things, hiring qualified personnel with expertise to perform specific functions, and designing and implementing improved processes and internal controls, including ongoing senior management review and audit committee oversight. We plan to remediate the identified material weakness through the redistribution of job responsibilities, by hiring additional senior accounting staff, and through the design and implementation of additional internal controls in order to promote adequate segregation of duties. We expect to complete the remediation in 2021 in conjunction with the process of developing our various business initiatives. We expect to incur additional costs to remediate this weakness, primarily personnel costs.

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Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation that occurred during or subsequent to the period ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is not currently a party to any material legal proceedings and is not aware of any pending or threatened legal proceeding against the Company that the Company believes could have a material adverse effect on its business, operating results, cash flows or financial condition. The Company is periodically the subject of various pending or threatened legal actions and claims arising out of its operations in the normal course of business. Regardless of the outcome, such proceedings or claims can have an adverse impact on the Company because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained.

ITEM 1A. RISK FACTORS

Our business, financial condition, results of operations, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth in our Form 10-K, the occurrence of any one of which could have a material adverse effect on our actual results.

There have been no material changes to the Risk Factors previously disclosed in our Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

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ITEM 6. EXHIBITS

Exhibit No.	Description
10.1	Equity Purchase Agreement, dated May 18, 2021, by and among the Company, Adare Pharmaceuticals, Inc., and Activ Nutritional, LLC (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 21, 2021)
10.2+*	Employment Agreement by and between the Company and Craig Sheehan dated June 1, 2021
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a – 14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Accounting Officer pursuant to Rule 13a – 14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Chief Executive Officer and Chief Accounting Officer pursuant to 18.U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

101.INS*	Inline XBRL Instance Document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline  XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File - the cover page from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 is formatted in Inline XBRL

*	Filed herewith.
+	Indicates a management contract or any compensatory plan, contract or arrangement.

40

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on the 16th day of August 2021.

Signature	Title	Date
/s/ Bret Scholtes	Chief Executive Officer	August 16, 2021
Bret Scholtes	(Principal Executive Officer)
/s/ Jeffrey Benjamin	Chief Accounting Officer	August 16, 2021
	(Principal Financial and Accounting Officer)

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EX-10.2

Exhibit 10.2

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is made by and between Guardion Health Sciences, Inc., a Delaware corporation (the “Company”) and the individual identified on Exhibit A attached hereto (the “Employee”) effective as of the Effective Date.

RECITALS

WHEREAS, the Company is a specialty health sciences company (i) that develops medical foods and medical devices in the ocular health marketplace and (ii) that is developing nutraceuticals and supplements for consumer use;

WHEREAS, the Company, through its wholly-owned affiliate, is acquiring all of the equity in Activ Nutritionals, LLC, a Delaware limited liability company (“Activ”) from Adare Pharmaceuticals Inc., a Nevada corporation (“Adare”), on the day prior to the Effective Date;

WHEREAS, Employee was an employee of Adare and solely responsible for the operation of Activ and is therefore critical to the Company’s success with Activ and related business initiatives; and

WHEREAS, from and after the date hereof, the Company desires to retain the services of the Employee pursuant to the terms and conditions set forth herein and the Employee desires to be employed by the Company on such terms and conditions.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Employee agree as follows:

AGREEMENT

1. Term of Agreement. This Agreement will be effective on the Effective Date. The initial term of the Employee’s employment shall be for the period set forth on Exhibit A attached hereto (the “Initial Term”); provided that, at the end of the Initial Term, the term of this Agreement shall automatically renew for successive one (1) year terms (each, a “Renewal Term” and collectively with the Initial Term, the “Term”), unless either party provides written notice to the other of a non-renewal of the Term no less than sixty (60) days prior to the commencement of a Renewal Term. The Employee’s employment shall terminate upon a non-renewal of the Term or such earlier time, at the Company’s option, in the event Employee provides notice of his nonrenewal.

2. Position and Duties. During the Term, the Employee shall serve the Company in the position and perform the duties as are set forth on Exhibit A attached hereto. Employee shall report to the Company’s President and Chief Executive Officer.

3. Full Business Time and Attention. Except as otherwise set forth in this Agreement, the Employee shall (a) devote all of Employee’s business time, attention, skill and energy to the duties and responsibilities of Employee’s position (allowing for management of Employee’s personal affairs that do not interfere with Employee’s duties and responsibilities to the Company); (b) service the Company faithfully, diligently and to the best of Employee’s ability; (c) use Employee’s best reasonable efforts to promote the success of the Company; and (d) cooperate fully with the Company’s Chief Executive Officer and the Board of Directors (the “Board”) or any committee thereof in the advancement of the Company’s best interests to assure full and efficient performance of Employee’s duties hereunder.

-1-

4. Compensation and Benefits. During the Term:

a. Base Salary. The Employee shall be paid the annual base salary set forth on Exhibit A attached hereto, or such greater amount as may be determined by the Company from time to time in its sole discretion, payable in equal periodic installments according to the Company’s customary payroll practices, but not less frequently than monthly (the “Base Salary”). The Base Salary may be increased but not decreased without the Employee’s written consent.

b. Benefits. The Employee shall, during the Term, be eligible to participate, commensurate with the Employee’s position, in such retirement, life insurance, hospitalization, major medical, fringe and other employee benefit plans that the Company generally maintains for its full-time employees (collectively, the “Benefits”). Notwithstanding the foregoing, the Company may discontinue or terminate at any time any employee benefit plan, policy or program now existing or hereafter adopted and will not be required to compensate the Employee for such discontinuance or termination; provided, however, that the Company shall be required to offer to the Employee any rights or benefits extended to other employees in the event of termination of such plans or benefits, including, but not limited to coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).

c. Bonus. During the Term (and any Renewal Term), the Employee shall have an annual target cash bonus opportunity of no less than 50% of the Base Salary (the “Bonus”), based on the achievement of Company and individual performance objectives to be determined in good faith by the Board in advance and in consultation with the Employee (the “Performance Objectives”). Except as otherwise described in Sections 5(c)(iv) and 6(b)(ii), the Bonus shall not be earned or owed until such time as it is calculable and payable following the conclusion of the year for which the Performance Objectives are established.

d. Clawback. Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or any other compensation, paid to the Employee pursuant to this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, government regulation, or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation, or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement). However, Employee will not forfeit any compensation, including incentive compensation, that is earned pursuant to this Agreement.

-2-

e. Reimbursement. If the Company is required to restate its financial information due to material non-compliance, as a result of intentional misconduct committed by Employee, with financial reporting requirements under federal securities laws, the Employee must reimburse the Company for any bonuses advanced to and profits received by Employee from sale of company securities during the twelve (12) months after such financial information was initially reported.

f. Equity Incentive Compensation. The Employee shall be entitled to participate, commensurate with the Employee’s position, in the Guardion Health Systems, Inc. 2018 Omnibus Equity Incentive Plan (together with any successor plan, the “Incentive Plan”), on such terms as further described on Exhibit A attached hereto.

g. Expenses. The Company shall pay on behalf of the Employee (or reimburse Employee for) reasonable documented expenses necessarily incurred by Employee in the performance of Employee’s duties under this Agreement and, in accordance with the Company’s existing policies and procedures pertaining to the reimbursement of expenses to employees in general. Notwithstanding anything herein to the contrary or otherwise, except to the extent any expense or reimbursement provided pursuant to this Section 4.h does not constitute a “deferral of compensation” within the meaning of Section 409A of the Code (as defined below): (i) the amount of expenses eligible for reimbursement provided to the Employee during any calendar year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to the Employee in any other calendar year, (ii) the reimbursements for expenses for which the Employee is entitled to be reimbursed shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred, (iii) the right to payment or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit and (iv) the reimbursements shall be made pursuant to objectively determinable and nondiscretionary Company policies and procedures regarding such reimbursement of expenses.

5. Termination of Employment.

a. By the Company. The Company may terminate the Term and Employee’s employment, for the following reasons:

i.

Death. The Term shall terminate immediately upon the death of the Employee.

ii.

Disability. The Company may terminate the Term and the Employee’s employment with the Company immediately upon a determination of Disability. For purposes of this Agreement the Employee has a “Disability” if, for physical or mental reasons, the Employee is unable to perform the essential duties required of the Employee under this Agreement, even with reasonable accommodations, for a period of six (6) consecutive months or a period of one-hundred eighty (180) days during any twelve (12) month period, as determined by an independent medical professional mutually acceptable to the parties. If requested by the Company, the Employee shall submit to a reasonable number of examinations by the independent medical professional making the determination of Disability at the Company’s expense.

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iii.

For Cause. The Company may terminate the Term and the Employee’s employment with the Company at any time for Cause. For purposes of this Agreement and the Incentive Plan, “Cause” shall mean: (1) Employee’s conviction of or plea of guilty or nolo contendere to a felony, or any other crime involving moral turpitude or which results in material harm to the Company, (2) Employee’s fraud against the Company or any breach of fiduciary duty owed to the Company, (3) Employee’s theft, misappropriation or embezzlement of the assets or funds of the Company or any customer, or engagement in misconduct that is materially injurious to the Company, (4) Employee’s gross negligence or willful misconduct in the performance of Employee’s duties under this Agreement, (5) Employee’s material breach of this Agreement, including any material violation of any of the restrictions set forth in Section 7, or any Company policies, including the Company’s Code of Ethics, which breach or violation, if capable of being cured, is not cured to the Board’s reasonable satisfaction within ten (10) business days after written notice thereof to the Employee; (6) Employee’s continuous failure to perform Employee’s assigned duties or responsibilities (other than a failure resulting from Employee’s death or Disability as defined herein) if such failure is not cured to the Board’s reasonable satisfaction within ten (10) business days after written notice thereof to the Employee; or (7) Employee’s knowing violation of any federal or state law or regulation applicable to the Company’s business.

iv.

Without Cause. The Company may terminate the Term and the Employee’s employment at any time without Cause by providing the Employee with thirty (30) days’ prior written notice; provided, that during such thirty (30) day notice period, the Company may, in its discretion, place restrictions upon the Employee’s contact with the workplace, customers and other business-related parties.

b. By Employee. The Employee may terminate the Term and Employee’s employment with the Company for any of the following reasons:

i. For Any Reason. Upon sixty (60) days’ prior written notice delivered at any time, the Employee may terminate the Term and Employee’s employment hereunder, for any reason or no reason at all.

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ii. For Good Reason. The Employee may terminate the Term and Employee’s employment hereunder for “Good Reason” (as hereinafter defined). For purposes of this Agreement and the Incentive Plan, “Good Reason” shall mean any one of the conditions set forth below, so long as (1) Employee has provided written notice to the Company of the existence of such condition within sixty (60) days of Employee’s initial knowledge of its existence, (2) the Company has not remedied the condition caused by the occurrence within thirty (30) days of such notice or such longer period as may be reasonably necessary, to the extent such condition is capable of being cured, and (3) the Employee gives a notice of Employee’s termination of employment within thirty (30) days after the end of such thirty (30) day period to remedy such condition. The following conditions will constitute “Good Reason”: (A) a material diminution in the Employee’s duties, responsibilities or authority; (B) a material breach by the Company of this Agreement or any other material agreement with the Employee (e.g., an equity award); (C) the Company materially reduces the Employee’s Base Salary or incentive opportunities, as in effect from time to time, without the Employee’s prior written consent; (D) the Company directs the Employee to participate in an unlawful act; or (E) a change in the geographic location in which the Employee must provide services on a regular and ongoing basis more than twenty-five (25) miles from Employee’s residence in New Jersey.

c. Compensation Upon Termination.

i.	Death. Within thirty (30) days following the termination of the Term due to the Employee’s death, or such earlier time as may be required by law, the Company shall pay to the Employee’s estate the Employee’s Base Salary, any Bonus for the year prior to the year in which the Employee’s death occurs (to the extent unpaid) and Benefits accrued through the date of the Employee’s death. Upon payment to the Employee of the foregoing amounts, the Company shall have no further obligation or liability to the Employee for duplicative payments or benefits under any other agreement, except as required by applicable law.
ii.	Disability. Within thirty (30) days following the termination of the Term due to the Employee’s Disability, or such earlier time as may be required by law, the Company shall pay to the Employee the Employee’s Base Salary, any Bonus for the year prior to the year in which the Employee’s termination due to Disability occurs (to the extent unpaid) and Benefits accrued through the date of the Employee’s termination. Upon payment to the Employee of the foregoing amounts, the Company shall have no further obligation or liability to or for the benefit of the Employee for duplicative payments or benefits under any other agreement, except as required by applicable law.
iii.	For Cause or Non-Renewal of Term by the Company. Upon termination of the Term for Cause, or in the event that the Term expires after a notice of non-renewal is delivered by the Company (as described in Section 1), the Company shall pay to the Employee the Employee’s Base Salary and Benefits accrued through the date of the Employee’s termination, provided, however, that if the Company elects not to renew the Term, Employee shall receive any Bonus for the year prior to the year in which Employee’s employment terminates (to the extent unpaid) and a pro-rated Bonus for the year of termination (to the extent Employee has achieved the Performance Objectives). Upon payment to the Employee of the foregoing amounts, the Company shall have no further obligation or liability to or for the benefit of the Employee for duplicative payments or benefits under any other agreement, except as required by applicable law.

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iv.	Without Cause, Including Due to Change in Control. In the event that the Company terminates the Term and the Employee’s employment without Cause, including if Employee’s employment is terminated following a Change in Control (as defined in the Incentive Plan), the Company shall pay or provide to the Employee: (1) six (6) months’ Base Salary and payment for continuation of Benefits, (2) Employee’s Base Salary and Benefits accrued through the date of the Employee’s termination, and (3) any Bonus for the year prior to the year in which Employee’s employment terminates (to the extent unpaid) and a pro-rated Bonus for the year of termination (to the extent Employee has achieved the Performance Objectives). Item (1) above shall be paid in accordance with the Company’s payroll practices in effect from time to time, but Item (1) above shall be paid not less frequently than monthly. Upon payment to the Employee of the foregoing amounts, the Company shall have no further obligation or liability to or for the benefit of the Employee for duplicative payments or benefits under any other agreement, except as required by applicable law.
v.	For Any Reason. In the event the Employee terminates employment with the Company during the Term for any reason other than Good Reason, the Company shall pay to the Employee the Employee’s Base Salary and Benefits accrued through the date of the Employee’s termination. Upon payment to the Employee of the foregoing amounts, the Company shall have no further obligation or liability to or for the benefit of the Employee for duplicative payments or benefits under any other agreement, except as required by applicable law.
vi.	For Good Reason. If the Employee terminates the Term and the Employee’s employment for Good Reason, the Company shall pay or provide to the Employee: (1) six (6) months’ Base Salary and payment for continuation of Benefits, (2) the Employee’s Base Salary and Benefits accrued through the date of termination, and (3) any Bonus for the year prior to the year in which Employee’s employment terminates (to the extent unpaid) and a pro-rated Bonus for the year of termination (to the extent Employee has achieved the Performance Objectives). Item (1) above shall be paid in accordance with the Company’s payroll practices in effect from time to time, but Item (1) above shall be paid not less frequently than monthly. Upon payment to the Employee of the foregoing amounts, the Company shall have no duplicative obligation or liability to or for the benefit of the Employee under any other agreement, except as required by applicable law.

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vii. Release. As an additional prerequisite and condition precedent in order to be entitled to and receive the severance benefits described in Section 5(a)(iv) and (vi) above (in excess of Base Salary and Benefits accrued through the date of termination), the Employee must execute, deliver to the Company, and not revoke (to the extent the Employee is allowed to do so) a Release (as defined below) within forty-five (45) days of the date of the Employee’s termination of employment (the “Release Period”). “Release” shall mean a release of all claims that the Employee has or may have against the Company, its board of directors, any of its subsidiaries or affiliates, or any of its employees, directors, officers, employees, agents, plan sponsors, administrators, successors, fiduciaries, or attorneys, arising out of the Employee’s employment with, and termination of employment from, the Company, except for any claims to enforce the terms of this Agreement and the then-applicable terms of any other written agreement, plan or arrangement of the Company or any of its subsidiaries or affiliates, and any claims for unemployment or workers’ compensation benefits by Employee. The Release shall not impose any additional restrictions on the Employee’s post-employment activities, shall be in a form that is otherwise reasonably acceptable to the Company or the Board. Notwithstanding anything to the contrary in this Agreement, if the Release Period straddles two calendar years, no severance benefits shall be paid to the Employee until the second calendar year (with any missed severance payments being paid to the Employee on the first payroll date occurring in the second calendar year).

6. Indemnification and Insurance.

a.

Indemnification. The Employee shall be indemnified (and advanced expenses) to the fullest extent permitted or authorized by the Certificate of Incorporation or Bylaws of the Company.

b.

D&O Insurance. A directors’ and officers’ liability insurance policy (or policies) shall be kept in place by the Company, during the Term providing coverage to the Employee that is no less favorable to Employee in any respect (including, without limitation, with respect to scope, exclusions, amounts and deductibles) than the coverage then being provided to any other senior executives or directors of the Company.

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7. Restrictive Covenants.

a. Confidentiality. The Employee acknowledges that the Confidential Information (as defined below) is a valuable, special, sensitive and unique asset of the business of the Company, the continued confidentiality of which is essential to the continuation of its business, and the improper disclosure or use of which could severely and irreparably damage the Company. The Employee agrees, for and on behalf of Employee, the Employee’s legal representatives, and the Employee’s successors and assigns that all Confidential Information is the property of the Company (and not of the Employee). The Employee further agrees that during the Term and at all times thereafter, the Employee (i) will continue to keep all Confidential Information strictly confidential and not disclose the Confidential Information to any other person or entity and (ii) shall not, directly or indirectly, disclose, communicate or divulge to any person, or use or cause or authorize any person to use any Confidential Information, except as may be used in the performance of the Employee’s duties hereunder in compliance with this Agreement and in the best interests of the Company. “Confidential Information” means all information, data and items relating to the Company (or any of its customers) which is valuable, confidential or proprietary, including, without limitation, information relating to the Company’s software, software code, accounts, receivables, customers and customer lists and data, prospective customers and prospective customer lists and data, Work Product, vendors and vendor lists and data, business methods and procedures, pricing techniques, business leads, budgets, memoranda, correspondence, designs, plans, schematics, patents, copyrights, equipment, tools, works of authorship, reports, records, processes, pricing, costs, products, services, margins, systems, software, service data, inventions, analyses, plans, intellectual property, trade secrets, manuals, training materials and methods, sales and marketing materials and compilations of and other items derived (in whole or in part) from the foregoing. Confidential Information may be in either paper, electronic or computer readable form. Notwithstanding the foregoing, “Confidential Information” shall not include information that: (i) becomes publicly known without breach of the Employee’s obligations under this Section 7(a), or (ii) is required to be disclosed by law or by court order or government order; provided, however, that if the Employee is required to disclose any Confidential Information pursuant to any law, court order or government order, (x) the Employee shall promptly notify the Company of any such requirement so that the Company may seek an appropriate protective order or waive compliance with the provisions of this Agreement, (y) the Employee shall reasonably cooperate with the Company to obtain such a protective order at the Company’s cost and expense, and (z) if such order is not obtained, or the Company waives compliance with the provisions of this Section 7(a), the Employee shall disclose only that portion of the Confidential Information which the Employee is advised by counsel that the Employee is legally required to so disclose. The Employee will notify the Company promptly and in writing of any circumstances of which the Employee has knowledge relating to any unauthorized possession or use of any Confidential Information by any Person.

b. Immunity Notice. The Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret or other Confidential Information that: (i) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and made solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Should the Employee file a lawsuit against the Company for retaliation for reporting a suspected violation of law, the Employee may disclose the trade secret or Confidential Information to the Employee’s attorney and use the trade secret or Confidential Information in the court proceeding, if the Employee: (x) files any document containing the trade secret or Confidential Information under seal, and (y) does not disclose the trade secret of Confidential, except pursuant to court order.

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c. Return of Company Property. The Employee will deliver to the Company at the termination of the Employee’s employment with the Company, or at any other time the Company may request, all equipment, files, property, memoranda, notes, plans, records, reports, computer tapes, printouts, Confidential Information, Work Product, software, documents and data (and all electronic, paper or other copies thereof) belonging to the Company, which the Employee may then possess or have under the Employee’s control. However, nothing in this Agreement or elsewhere shall prohibit the Employee from retaining (and using appropriately) copies of documents relating to Employee’s personal rights and obligations.

d. Intellectual Property Rights. The Employee acknowledges and agrees that all inventions, technology, processes, innovations, ideas, improvements, developments, methods, designs, analyses, trademarks, service marks, and other indicia of origin, writings, audiovisual works, concepts, drawings, reports and all similar, related, or derivative information or works (whether or not patentable or subject to copyright), including but not limited to all patents, copyrights, copyright registrations, trademarks, and trademark registrations in and to any of the foregoing, along with the right to practice, employ, exploit, use, develop, reproduce, copy, distribute copies, publish, license, or create works derivative of any of the foregoing, and the right to choose not to do or permit any of the aforementioned actions, which relate to the Company or its actual or anticipated business, research and development or existing or future products or services and which are conceived, developed or made by the Employee while employed by the Company (collectively, the “Work Product”) belong to the Company. All Work Product created by the Employee while employed by the Company (whether or not on the premises) will be considered “work made for hire,” and as such, the Company is the sole owner of all rights, title, and interests therein. All other rights to any new Work Product, including but not limited to all of the Employee’s rights to any copyrights or copyright registrations related thereto, are hereby conveyed, assigned and transferred to the Company. The Employee will promptly disclose and deliver such Work Product to the Company and, at the Company’s expense, perform all actions reasonably requested by the Company (whether during or after the Term) to establish, confirm and protect such ownership (including, without limitation, the execution of assignments, copyright registrations, consents, licenses, powers of attorney and other instruments).

e. Non-Competition. While employed by the Company, the Employee shall not, directly or indirectly, enter into the employment of, render any services to, engage, manage, operate, join, or own, or otherwise offer other assistance to or participate in, as an officer, director, employee, principal, agent, proprietor, representative, stockholder, partner, associate, consultant, sole proprietor or otherwise, any employer other than the Company. During the Term, Employee may own up to five percent (5%) of the outstanding stock of a publicly held corporation which constitutes or is affiliated with an entity that is engaged in the Business only so long as the Employee is not an officer, director, affiliate, employee, advisor or consultant or otherwise maintains voting control or influence, whether by shareholding, contract or otherwise, of such entity. For purposes of this Section 7, “Business” means the business of the Company and its subsidiaries as described in the recitals to this Agreement, the actual business of the Company and its subsidiaries as conducted as of the date of termination, and any anticipated business considered by the Board towards which the Company or any subsidiaries thereof has taken material steps or incurred material expenditures in furtherance thereof prior to the termination date and which is Employee is aware.

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f. Non-Solicitation. During the Term and for a period of one (1) year thereafter (the “Restricted Period”), the Employee shall not, directly or indirectly, whether for the Employee’s own account or for the account of any other person, (i) attempt to or solicit for hire any person who is employed by the Company or any of its subsidiaries, or solicit or attempt to solicit any such employee to terminate employment with the Company or any of its subsidiaries, or (ii) endeavor to entice away from the Company, or otherwise interfere with (whether by reason of cancellation, withdrawal, modification of relationship or otherwise), any actual or prospective relationship of the Company or any of its subsidiaries, with respect to any person (x) who is employed by or otherwise engaged to perform services for the Company or any of its subsidiaries, including, but not limited to, any independent contractor or representative or (y) who is an actual or bona fide prospective licensee, landlord, customer, supplier, or client of the Company or any of its subsidiaries (or other person with which the Company or any of its subsidiaries had an actual or prospective bona fide business relationship). However, the Employee shall not be deemed to be in violation of this Section 7 if Employee hires an individual who responds to a general, non-targeted advertisement of employment.

g. Non-Disparagement. The Employee agrees that the Employee will not make or publish any statement or communication which is false, negative, unflattering or disparaging with respect to the Company or any of its respective affiliates and/or any of its respective direct or indirect shareholders, officers, directors, members, managers, employees or agents. The foregoing shall not be violated by (i) statements as required in response to legal proceedings or governmental investigations (including, without limitation, depositions in connection with such proceedings), (ii) statements made in the context of prosecuting or defending any legal dispute (whether or not litigation has commenced) as between the Employee on the one hand and the Company on the other, and (iii) truthful information that is required or authorized to be disclosed by applicable law or Company policy.

h. Non-Interference with Employee’s Agency Rights. The Employee understands that the terms of this Agreement, including the provisions regarding confidentiality and non-disparagement, are not intended to interfere with or waive any right (if any such right otherwise existed) to file a charge, cooperate, testify or participate in an investigation with any appropriate federal or state governmental agency, including the ability to communicate with such agency, such as, but not limited to, the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority (“FINRA”), any other securities regulatory agency or authority, or any other self-regulatory organization, or any other federal or state regulatory authority (“Government Agencies”), whether in connection with reporting a possible securities law violation or otherwise, without notice to Company. This Agreement further does not limit the Employee’s right to receive a bounty or reward for information provided to any such Government Agencies, to the SEC staff, or to any other securities regulatory agency or authority.

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i. Rationale for and Scope of Covenants. If any of the covenants contained in this Section 7 are held to be invalid or unenforceable due to the unreasonableness of the time, geographic area, or range of activities covered by such covenants, such covenants shall nevertheless be enforced to the maximum extent permitted by law and effective for such period of time, over such geographical area, or for such range of activities as may be determined to be reasonable by a court of competent jurisdiction and the parties hereby consent and agree that the scope of such covenants may be judicially modified, accordingly, in any proceeding brought to enforce such covenants. The Employee agrees that the Employee’s services hereunder are of a special, unique, extraordinary and intellectual character and the Employee’s position with the Company places the Employee in a position of confidence and trust with the customers, suppliers and employees of the Company. The Employee and the Company agree that, in the course of employment hereunder, the Employee has and will continue to develop a personal relationship with the Company’s customers, and a knowledge of these customers’ affairs and requirements as well as confidential and proprietary information developed by the Company after the date of this Agreement. The Employee agrees that it is reasonable and necessary for the protection of the goodwill, confidential and proprietary information, and legitimate business interests of the Company that the Employee make the covenants contained herein, that the covenants are a material inducement for the Company to employ or continue to employ the Employee and to enter into this Agreement. For the avoidance of doubt, for purposes of this Section 7, the term “Company” includes Guardion Health Sciences, Inc. and each of its other direct and indirect subsidiaries.

j. Remedies.

i. The Employee consents and agrees that if the Employee violates any covenants contained in this Section 7, the Company would sustain irreparable harm and, therefore, in addition to any other remedies which may be available to it, the Company shall be entitled to seek an injunction restraining the Employee from committing or continuing any such violation of this Section 7. Nothing in this Agreement shall be construed as prohibiting the Company or the Employee from pursuing any other remedies including, without limitation, recovery of damages. The Employee acknowledges that Company’s direct and indirect subsidiaries are express third-party beneficiaries of this Agreement and that they may each enforce these rights as a third-party beneficiary. The Company has fully performed all obligations entitling it to the restrictive covenants, and the restrictive covenants therefore are not executory or otherwise subject to rejection and are enforceable under the Bankruptcy Code. However, if the Company or its subsidiaries is in material breach of any obligation to the Employee under this Agreement or any other material written agreement to which the Employee is a party, the Restricted Period shall terminate if such breach is not cured to the Employee’s reasonable satisfaction within ten (10) days after the Employee provides the Company with written notice of such breach. In the event of the breach by the Employee of any of the provisions of this Section 7, the Company shall be entitled, in addition to all other available rights and remedies, to terminate the Employee’s employment status hereunder. The Company may assign the restrictive covenants set forth in this Section 7 in connection with the acquisition of all or substantially all of the assets of the Company and its subsidiaries, and any such assignee or successor shall be entitled to enforce the rights and remedies set forth in this Section 7. The Employee acknowledges and agrees that the Restricted Period for a violated provision of this Section 7 shall be tolled on a day for day basis for all periods in which the Employee is found to have violated such provision so that the Company receives the full benefit of the Restricted Period to which the Employee has agreed.

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ii. In addition, and without limitation to the foregoing, except as required by law, if (A) the Company files a civil action against the Employee based on the Employee’s alleged breach of the Employee’s obligations under Section 7 hereof, and (B) a court of competent jurisdiction issues a judgment that the Employee has breached any of such obligations and has issued injunctive relief, then the Employee shall promptly repay to the Company any such severance payments the Employee previously received pursuant to Section 5(c) in excess of the Employee’s Base Salary and Benefits accrued through the date of the Employee’s termination, and the Company will have no obligation to pay any of such excess amounts that remain payable by the Company under Section 5.c.

8. Notice. Any notice required or desired to be given under this Agreement shall be in writing and shall be addressed as follows:

If to Company:	Guardion Health Sciences, Inc.
	15150 Avenue of Science
	Suite 200
	San Diego, CA 92128
	Attn: Chief Executive Officer
If to Employee:	159 Beekman Lane
	Hillsborough, NJ 08844

Notice shall be deemed given on the date it is deposited in the United States mail, first class postage prepaid and addressed in accordance with the foregoing, or the date otherwise delivered in person, whichever is earlier. The address to which any notice must be sent may be changed by providing written notice in accordance with this Section 8.

9. General Provisions.

a. Amendments. This Agreement (together with its Exhibits) contains the entire agreement between the parties regarding the subject matter hereof. No agreements or representations, verbal or otherwise, express or implied, with respect to the subject matter of this Agreement have been made by either party which are not set forth expressly in this Agreement. This Agreement may only be altered or amended by the express mutual written consent of the Company and the Employee. In the event of any conflict between the provisions of this Agreement and the provisions of any Incentive Plan agreement, the provisions of this Agreement shall control to the extent they are more favorable to the Employee.

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b. Applicable Law. This Agreement shall be governed in accordance with the laws of the State of California regardless of the conflict of laws rules or statutes of any jurisdiction.

c. Successors and Assigns. This Agreement will be binding upon the Employee’s heirs, executors, administrators or other legal representatives or assigns. This Agreement will not be assignable by the Employee, but shall be assigned by the Company in connection with the sale, lease, license, assignment, merger, consolidation, share exchange, liquidation, transfer, conveyance or other disposition (whether direct or indirect) of all or substantially all of its business and/or assets in one or a series of related transactions (individually and/or collectively, a “Fundamental Transaction”). The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Employment Agreement. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Employment Agreement referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Employment Agreement with the same effect as if such Successor Entity had been named as the Company herein.

d. No Waiver. The failure of any party to this Agreement to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision, nor in any way to affect the validity of this Agreement or any part thereof or the right of any party under this Agreement to enforce each and every such provision. No waiver of any breach of this Agreement shall be effective unless it is expressly acknowledged in a writing executed by the party against whom it is sought to be enforced, and any such waiver shall not constitute a waiver of any other or subsequent breach.

e. Section Headings, Construction. The headings used in this Agreement are provided for convenience only and shall not affect the construction or interpretation of this Agreement. All words used in this Agreement shall be construed to be of such gender or number as the circumstances require. In no event shall the terms or provisions hereof be construed against any party on the basis that such party or counsel for such party drafted this Agreement or the attachments hereto.

f. Severability. If any provision of this Agreement is held to be invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable.

g. Survival. The provisions of Sections 5, 6, 7, and 9 of this Agreement shall survive the termination of the Term for any reason.

h. Counterparts. This Agreement may be executed in one or more counterparts each of which shall be deemed to be an original of this Agreement and all of which, when taken together, shall be deemed to constitute one and the same agreement. Signatures delivered electronically (including, without limitation, by portable document format attached to an email) shall be effective for all purposes.

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i. Opportunity to Review. The Employee represents that the Employee has been provided with an opportunity to review the terms of the Agreement with legal counsel.

j. Compliance with Code Section 409A. This Agreement is intended, and shall be construed and interpreted, to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) or an exemption therefrom. For purposes of Code Section 409A, each payment of compensation under this Agreement shall be treated as a separate payment of compensation. Any amounts payable solely on account of an involuntary termination shall be excludible from the requirements of Code Section 409A, either as separation pay or as short-term deferrals to the maximum possible extent. Any reference to the Employee’s “termination,” “termination of employment” or “termination of the Term” shall mean the Employee’s “separation from service” as defined in Code Section 409A from the Company and all entities with whom the Company would be treated as a single employer for purposes of Code Section 409A. Nothing herein shall be construed as a guarantee of any particular tax treatment to Employee and the Company shall have no liability to the Employee with respect to any penalties that might be imposed on the Employee by Code Section 409A for any failure of this Agreement to comply with Code Section 409A. In the event that the Employee is a “specified employee” (as described in Code Section 409A), and any payment or benefit payable pursuant to this Agreement constitutes deferred compensation under Code Section 409A, then no such payment or benefit shall be made before the date that is six months after the Employee’s “separation from service” (as described in Code Section 409A) (or, if earlier, the date of the Employee’s death). Any payment or benefit delayed by reason of the prior sentence shall be paid out or provided in a single lump sum at the end of such required delay period in order to catch up to the original payment schedule.

k. Attorney’s Fees. In any action or proceeding (including any appeals) brought to enforce any provision of this Agreement, each party shall be responsible for its own attorneys’ fees and costs; provided, however, that nothing herein precludes the prevailing party in such an action from recovering its attorneys’ fees and costs in the manner and to the extent authorized by applicable law.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first written above.

GUARDION HEALTH SCIENCES, INC.		CRAIG SHEEHAN
By:	/s/ Bret Scholtes	/s/ Craig Sheehan
Name:	Bret Scholtes	Date:	June 1, 2021
Date:	June 1, 2021

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EXHIBIT A

1.	Effective Date: June 2, 2021
2.	Employee Name: Craig Sheehan
3.	Position: Chief Commercial Officer
4.	Duties: The Employee will have the duties and authorities customarily and ordinarily exercised by executives holding the Chief Commercial Officer position at entities of the Company’s size and nature. Specifically, as Chief Commercial Officer, employee will be responsible for (i) developing, designing and approving the Company’s commercial strategy, (ii) analyzing, developing and implementing the Company’s marketing and sales plans, (iii) developing profit for the Company and providing financial and revenue support for the Company, (iv) establishing marketing strategies and goals, (v) the integration, maintenance and growth of the Company’s Viactiv brand and the acquisition of Activ Nutritionals, LLC. (“Activ”) and ensure a smooth and appropriate transition of services from Activ to the Company, (vi) assisting with the evaluation and integration of new products and mergers and acquisition targets, and (vi) such other duties as may be assigned to Employee from time to time by the Chief Executive Officer or the Board.
5.	Location of Employment: the Employee’s place of residence in New Jersey, subject to attendance at the Company’s headquarters, currently located in San Diego, California as requested by the Company’s Chief Executive Officer, but no more often than one (1) week per month absent Employee’s consent.
6.	Term: Commencing on the Effective Date and ending one (1) year from the Effective Date, as may be renewed in accordance with Section 1.
7.	Base Salary: $250,000 per annum.
8.	Equity: During the Term, the Employee shall be eligible to participate in all incentive awards made under the Incentive Plan to senior executives generally, as such awards are granted from time to time by the Compensation Committee of the Board (the “Compensation Committee”), in each case at a level, and on terms and conditions, that are (x) commensurate with Employee’s positions and responsibilities at the Company and (y) appropriate in light of Employee’s performance and of corresponding awards (if any) to other senior executives of the Company, all as determined at the sole discretion of the Compensation Committee. In addition, effective as of the Effective Date, the Employee shall be granted an award of (i) fifty thousand (50,000) stock options (the “Stock Options”) under the Incentive Plan, at an exercise price equal to the closing price per share of the Company’s common stock as quoted on Nasdaq on the Effective Date, and which grant shall vest ratably over three (3) years from June 30 of each year commencing on June 30, 2022 and each year thereafter until fully vested, and (ii) fifty thousand (50,000) restricted shares of the Company’s common stock (“Restricted Shares”), which Restricted Shares shall vest ratably over three (3) years from June 30 of each year commencing on June 30, 2022 and each year thereafter until fully vested.

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Bret Scholtes, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Guardion Health Sciences, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 16, 2021	/s/ Bret Scholtes
	Bret Scholtes
	Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jeffrey Benjamin, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Guardion Health Sciences, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 16, 2021	/s/ Jeffrey Benjamin
	Chief Accounting Officer
	(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ENACTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Guardion Health Sciences, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of Bret Scholtes, Chief Executive Officer of the Company, and Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 16, 2021	/s/ Bret Scholtes
	Bret Scholtes
	Chief Executive Officer (Principal Executive Officer)
August 16, 2021	/s/ Jeffrey Benjamin
	Chief Accounting Officer
	(Principal Financial and Accounting Officer)

XML

Cover - shares	6 Months Ended
	Jun. 30, 2021	Aug. 16, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2021
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2021
Current Fiscal Year End Date	--12-31
Entity File Number	000-55723
Entity Registrant Name	GUARDION HEALTH SCIENCES, INC.
Entity Central Index Key	0001642375
Entity Tax Identification Number	47-4428421
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	2925 Richmond Avenue
Entity Address, Address Line Two	Suite 1200
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77098
City Area Code	800
Local Phone Number	873-5141
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	GHSI
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		26,426,993

XML

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Current assets
Cash	$ 5,502,411	$ 8,518,732
Short-term investments	7,000,266
Accounts receivable	1,884,782	11,248
Inventories	956,259	384,972
Prepaid expenses	1,203,169	179,931
Total current assets	16,546,887	9,094,883
Deposits	11,751	11,751
Prepaid expense	302,331
Property and equipment, net	245,711	285,676
Right of use asset, net	339,262	418,590
Intangible assets, net	11,850,833	50,000
Goodwill	11,988,050
Total assets	41,284,825	9,860,900
Current liabilities
Accounts payable	768,338	608,313
Accrued expenses	867,923	127,637
Operating lease liability – current	168,700	162,845
Payable to former officer		148,958
Derivative warrant liability		25,978
Total current liabilities	1,804,961	1,073,731
Operating lease liability – long term	186,427	271,903
Total liabilities	1,991,388	1,345,634
Stockholders’ Equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized, no shares issued and outstanding
Common stock, $0.001 par value; 250,000,000 shares authorized; 24,426,993 shares and 15,170,628 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	24,427	15,171
Additional paid-in capital	100,535,886	62,583,423
Accumulated deficit	(61,266,876)	(54,083,328)
Total stockholders’ equity	39,293,437	8,515,266
Total liabilities and stockholders’ equity	$ 41,284,825	$ 9,860,900

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	24,426,993	15,170,628
Common stock, shares outstanding	24,426,993	15,170,628

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenue
Total revenue	$ 1,223,720	$ 1,190,909	$ 1,457,017	$ 1,436,633
Cost of goods sold
Total cost of goods sold	665,219	644,579	798,255	753,688
Gross profit	558,501	546,330	658,762	682,945
Operating expenses
Research and development	16,756	44,581	37,364	75,769
Sales and marketing	440,793	519,067	898,520	1,007,913
General and administrative	2,537,826	1,712,183	4,829,277	3,228,698
Transaction costs related to acquisition of Activ Nutritional, LLC	2,103,680		2,103,680
Costs related to resignation of former officer (including the reversal of previously recognized stock compensation expense of $1,401,582 and $965,295 during the three months and six months ended June 30, 2020, respectively)		(1,052,223)		(615,936)
Impairment loss on equipment held for sale		30,948		30,948
Total operating expenses	5,099,055	1,254,556	7,868,841	3,727,392
Loss from operations	(4,540,554)	(708,226)	(7,210,079)	(3,044,447)
Other income (expense):
Interest expense		(1,790)		(3,538)
Interest income	266		266
Change in fair value of derivative liability		2,856		(6,088)
Total other income (expense)	266	1,066	266	(9,626)
Net loss	$ (4,540,288)	$ (707,160)	$ (7,209,813)	$ (3,054,073)
Net loss per common share – basic and diluted	$ (0.19)	$ (0.05)	$ (0.31)	$ (0.22)
Weighted average common shares outstanding – basic and diluted	24,426,993	14,427,869	22,897,683	13,766,465
Clinical Nutrition [Member]
Revenue
Total revenue	$ 1,171,445	$ 1,152,894	$ 1,333,588	$ 1,304,028
Cost of goods sold
Total cost of goods sold	639,188	628,205	724,105	695,291
Gross profit	532,257	524,689	609,483	608,737
Operating expenses
Loss from operations	(1,406,542)	(547,819)	(2,505,443)	(2,735,674)
Diagnostics Equipment [Member]
Revenue
Total revenue	52,275	35,315	123,429	126,505
Cost of goods sold
Total cost of goods sold	26,031	15,278	74,150	55,920
Gross profit	26,244	20,037	49,279	70,585
Operating expenses
Loss from operations	(31,601)	(73,583)	(64,031)	(139,485)
Other [Member]
Revenue
Total revenue		2,700		6,100
Cost of goods sold
Total cost of goods sold		$ 1,096		$ 2,477

XML

Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020
Income Statement [Abstract]
Stock compensation expense	$ 1,401,582	$ 965,295

XML

Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2019	$ 12,497	$ 57,531,014	$ (45,511,671)	$ 12,031,840
Beginning Balance, shares at Dec. 31, 2019	12,497,094
Fair value of vested stock options		55,281		55,281
Common stock issued upon exercise of warrants	$ 10,382	3,540,399		3,550,781
Common stock issued upon exercise of warrants, shares	1,730,400
Fair value of vested stock options – officer and director		436,287		436,287
Issuance of common stock for services	$ 25	12,300		12,325
Issuance of common stock for services, shares	4,167
Net loss			(2,346,913)	(2,346,913)
Ending balance, value at Mar. 31, 2020	$ 22,904	61,575,281	(47,858,584)	13,739,601
Ending Balance, shares at Mar. 31, 2020	14,231,661
Beginning balance, value at Dec. 31, 2019	$ 12,497	57,531,014	(45,511,671)	12,031,840
Beginning Balance, shares at Dec. 31, 2019	12,497,094
Fair value of vested stock options – officer and director				940,936
Net loss				(3,054,073)
Ending balance, value at Jun. 30, 2020	$ 23,391	61,237,993	(48,565,744)	12,695,640
Ending Balance, shares at Jun. 30, 2020	14,280,327
Beginning balance, value at Mar. 31, 2020	$ 22,904	61,575,281	(47,858,584)	13,739,601
Beginning Balance, shares at Mar. 31, 2020	14,231,661
Fair value of vested stock options		41,782		41,782
Common stock issued upon exercise of warrants	$ 487	998,153		998,640
Common stock issued upon exercise of warrants, shares	48,666
Fair value of vested stock options – officer and director		(1,377,223)		(1,377,223)
Net loss			(707,160)	(707,160)
Ending balance, value at Jun. 30, 2020	$ 23,391	61,237,993	(48,565,744)	12,695,640
Ending Balance, shares at Jun. 30, 2020	14,280,327
Beginning balance, value at Dec. 31, 2020	$ 15,171	62,583,423	(54,083,328)	8,515,266
Beginning Balance, shares at Dec. 31, 2020	15,170,628
Cumulative effect adjustment from the impact of adoption of ASU 2020-06 related to warrants (See Notes 2 and 9)			26,265	26,265
Fair value of vested stock options		205,772		205,772
Fair value of vested restricted stock		181,843		181,843
Common stock issued for cash, net of offering costs	$ 7,608	33,654,989		33,662,597
Common stock issued for cash, net of offering costs, shares	7,608,674
Common stock issued upon exercise of warrants	$ 1,648	3,566,767		3,568,415
Common stock issued upon exercise of warrants, shares	1,647,691
Net loss			(2,669,525)	(2,669,525)
Ending balance, value at Mar. 31, 2021	$ 24,427	100,192,794	(56,726,588)	43,490,633
Ending Balance, shares at Mar. 31, 2021	24,426,993
Beginning balance, value at Dec. 31, 2020	$ 15,171	62,583,423	(54,083,328)	8,515,266
Beginning Balance, shares at Dec. 31, 2020	15,170,628
Fair value of vested stock options – officer and director
Net loss				(7,209,813)
Ending balance, value at Jun. 30, 2021	$ 24,427	100,535,886	(61,266,876)	39,293,437
Ending Balance, shares at Jun. 30, 2021	24,426,993
Beginning balance, value at Mar. 31, 2021	$ 24,427	100,192,794	(56,726,588)	43,490,633
Beginning Balance, shares at Mar. 31, 2021	24,426,993
Fair value of vested stock options		183,452		183,452
Fair value of vested restricted stock		159,640		159,640
Net loss			(4,540,288)	(4,540,288)
Ending balance, value at Jun. 30, 2021	$ 24,427	$ 100,535,886	$ (61,266,876)	$ 39,293,437
Ending Balance, shares at Jun. 30, 2021	24,426,993

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Operating Activities
Net loss	$ (7,209,813)	$ (3,054,073)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	140,275	46,619
Impairment loss on equipment held for sale		30,948
Amortization of operating lease right-of-use asset	79,328	76,327
Fair value of vested stock options	389,224
Fair value of vested restricted stock	341,483	109,388
Fair value of vested stock options – officer and director		(940,936)
Change in fair value of derivative liability		6,088
(Increase)/decrease:
Accounts receivable	(73,839)	44,157
Inventories	41,776	(607,162)
Prepaid expenses	(1,276,545)	(219,380)
Increase/(decrease):
Accounts payable	(153,706)	262,496
Operating lease liability	(79,621)	(74,070)
Accrued expenses	665,042	(12,591)
Payable to former officer	(148,958)	311,458
Net cash used in operating activities	(7,285,354)	(4,020,731)
Investing Activities
Purchase of property and equipment	(1,142)	(40,733)
Purchase of US Treasury Bills	(35,000,000)
Sale of US Treasury Bills	27,999,734
Cash paid for acquisition, net of cash acquired	(25,960,572)
Net cash used in investing activities	(32,961,980)	(40,733)
Financing Activities
Proceeds from sale of common stock, net	33,662,599
Proceeds from exercise of warrants	3,568,414	4,549,421
Net cash provided by financing activities	37,231,013	4,549,421
Cash:
Net (decrease) increase	(3,016,321)	487,957
Balance at beginning of period	8,518,732	11,115,502
Balance at end of period	5,502,411	11,603,459
Cash paid for:
Income taxes	20,844
Non-cash financing activities:
Reclass of prepaid costs to inventory		308,178
Reclass of equipment sold from property and equipment to equipment held for sale		55,448
Adjust warrant liability for adoption of ASU 2020-06	25,978
Reclass of property and equipment to inventory		$ 8,771

XML

Organization and Business Operations

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Business Operations

1. Organization and Business Operations

Business

Guardion Health Sciences, Inc. (the “Company”) is a clinical nutrition and diagnostics company that develops and distributes clinically supported nutrition, medical foods, supplements and medical devices. The Company offers a portfolio of science-based, clinically supported products and devices designed to support healthcare professionals and providers, and their patients and consumers. In June 2021, the Company acquired Activ Nutritional, LLC (“Activ”), the owner and distributor of the Viactiv® line of chewable mineral supplements for bone health and other applications (see Note 3). Prior to its acquisition of Activ, the Company has been primarily engaged in research and development, product commercialization and capital raising activities.

The Company was formed in December 2009 as a California limited liability company under the name P4L Health Sciences, LLC. On June 30, 2015, the Company converted from a California limited liability company to a Delaware corporation, and changed its name from Guardion Health Sciences, LLC to Guardion Health Sciences, Inc.

Liquidity

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. For the six months ended June 30, 2021, the Company incurred a net loss of $7,209,813 and used cash in operating activities of $7,285,354. At June 30, 2021, the Company had cash and short-term investments on hand totaling $12,502,677 and working capital of $14,741,926. Notwithstanding the net loss for the six months ended June 30, 2021, management believes that its current cash balance is sufficient to ensure continuation of the Company as a going concern for at least one year from the date of this quarterly report.

The amount and timing of future cash requirements will depend, in part, on the Company’s ability to ultimately achieve operating profitability. The Company expects to continue to incur net losses and negative operating cash flows in the near-term and will continue to incur significant expenses for the development, commercialization and distribution of its clinical nutrition products (including the Viactiv® product line), the development and commercialization of its diagnostics equipment, and the successful development and commercialization of any new products or product lines. The Company may also utilize cash to fund additional acquisitions.

The Company may seek to raise additional debt and/or equity capital to fund future operations and strategic initiatives, but there can be no assurances that the Company will be able to secure such additional financing in the amounts necessary to fully fund its operating requirements on acceptable terms or at all. Over time, if the Company is unable to access sufficient capital resources on a timely basis to fund its operations, the Company may be forced to reduce or discontinue some or all of its technology and product development programs and curtail operations.

COVID-19

The Company is subject to risks and uncertainties of the COVID-19 pandemic that could adversely impact our business. The Company has implemented additional health and safety precautions and protocols in response to the pandemic and government guidelines, including curtailing employee travel and primarily working remotely. During 2020 and through the first half of 2021, sales of certain products remained flat as compared to prior comparable periods, as many professional offices were closed for long periods, or operating with limited capacity, due to COVID-19 related orders. During 2020 and through the second quarter of 2021, the Company did not experience a jeopardization of its supply chain due to the COVID-19 outbreak.

The extent of the impact of the COVID-19 pandemic has had and will continue to have on the Company’s business is highly uncertain and difficult to predict and quantify. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat it, including vaccination efforts and new strains of the virus, as well as the economic impact on local, regional, national and international markets.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed with the SEC. The condensed consolidated balance sheet as of December 31, 2020 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including notes, required by GAAP.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company’s financial position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. 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, 2021.

Reverse Stock Split

On March 1, 2021, following stockholder and board approval, the Company effectuated a 1-for-6 reverse split of its issued and outstanding shares of common stock, without any change to its par value. The authorized number of shares of common stock were not affected by the reverse stock split. No fractional shares were issued in connection with the reverse stock split, as all fractional shares were rounded up to the next whole share.

Accordingly, all share and per share amounts presented herein with respect to common stock have been retroactively adjusted to reflect the above-described reverse stock split for all periods presented.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, VectorVision Ocular Health, Inc., NutriGuard Formulations, Inc., Transcranial Doppler Solutions, Inc, and Activ Nutritional, LLC. All intercompany balances and transactions have been eliminated in consolidation.

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. 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 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 from those estimates.

Revenue Recognition

The Company generates its revenue from two business segments:

● Clinical Nutrition

● Diagnostics Equipment

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Revenue is recognized when control of promised goods or services is transferred to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those products or services. The Company reviews its sales transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable.

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.

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. Historically the Company has not experienced any significant payment delays from customers.

In certain circumstances, returns of products are allowed. A right of return does not represent a separate performance obligation, but because customers are allowed to return products, the consideration to which the Company expects to be entitled is variable. Upon evaluation of historical product returns, the Company determined it is probable that such returns will not cause a significant reversal of revenue in the future. Due to the insignificant amount of historical returns, as well as the standalone nature of the Company’s products and 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 segment are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Clinical nutrition	$	1,171,445	$	1,152,894	$	1,333,588	$	1,304,028
Diagnostics equipment		52,275		35,315		123,429		126,505
Other		-		2,700		-		6,100
	$	1,223,720	$	1,190,909	$	1,457,017	$	1,436,633

The Company’s Clinical Nutrition revenues earned during the three months and six months ended June 30, 2021 and 2020 are derived from distributors and individual retail customers in North America. Diagnostics Equipment revenues are derived from a worldwide customer base consisting of both retail customers and distributors. Sales to distributors were approximately 81% and 58% of total revenues for the six months ended June 30, 2021 and 2020, respectively, which included the Viactiv® product line from June 1, 2021 through June 30, 2021.

Revenues by geographical area are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
North America	$	1,176,608	$	270,664	$	1,348,748	$	505,023
Malaysia		-		890,000		-		890,000
Asia - other		29,787		22,990		88,049		25,790
Europe and other		17,325		7,255		20,220		15,820
	$	1,223,720	$	1,190,909	$	1,457,017	$	1,436,633

Business Combinations

The Company accounts for its business combinations using the acquisition method of accounting where the purchase consideration is allocated to the tangible and intangible assets acquired, and liabilities assumed, based on their respective fair values as of the acquisition date. The excess of the fair value of the purchase consideration over the estimated fair values of the net assets acquired is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth and margins, future changes in technology, brand awareness and discount rates. Fair value estimates are based on the assumptions that management believes a market participant would use in pricing the asset or liability.

Investments

Short-term investments as of June 30, 2021, consist of a U.S. Treasury Bill, which is classified as held-to-maturity. The Company’s U.S. Treasury Bill matured July 29, 2021 and the proceeds were reinvested into another U.S. Treasury Bill that is scheduled to mature approximately 30 days from the date of purchase. Unrealized gains and losses were de minimus. As of June 30, 2021, the carrying value of the Company’s U.S. Treasury Bill approximates its fair value due to its short-term maturity.

Accounts Receivable

Accounts receivable are recorded net of an allowance for expected losses. Management evaluates the collectability of its trade accounts receivable and determines an allowance for doubtful accounts based on historical write-offs, known or expected trends, and the identification of specific balances deemed uncollectible based on a customer’s financial condition, credit history and the current economic conditions.

There was no allowance for doubtful accounts as of June 30, 2021 and December 31,2020.

Inventories

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out (“FIFO”) basis. The Company records adjustments to its inventory for estimated obsolescence or diminution in net realizable value equal to the difference between the cost of the inventory and the estimated net realizable value. When evidence exists that the net realizable value of inventory is lower than its cost, the difference is recognized as a loss in the period in which it occurs. Once inventory has been written down, it creates a new cost basis for inventory that may not subsequently written up. For the three months and six months ended June 30, 2021 and 2020, there were no write-downs of inventory.

Intangible Assets

Amortizable finite-lived identifiable intangible assets consist of a trade name and customer relationships acquired in the acquisition of Activ effective June 1,2021 (See Note 3), and are stated at cost less accumulated amortization. The trade name and customer relationships are being amortized over a period of 10 years. The Company follows ASC 360 in accounting for finite-lived intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts. As of June 30, 2021, the Company determined there were no indicators of impairment of its intangible assets.

At June 30, 2021 and December 31, 2020, the Company has a trademark for $50,000 classified as an indefinite-lived intangible asset.

 Goodwill

Goodwill consists of the excess of the cost of Activ (see Note 3) over the fair value of amounts assigned to assets acquired and liabilities assumed. Under the guidance of ASC 350, goodwill is not amortized, rather it is tested for impairment annually, and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. An impairment loss generally would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit and would be measured as the excess carrying value of goodwill over the derived fair value of goodwill. The Company’s policy is to perform an annual impairment testing for its reporting units on December 31 of each fiscal year.

Concentrations

During the three months ended June 30, 2021, two customers accounted for approximately 39% and 13% of the Company’s sales. No other customer accounted for more than 10% of sales during the three months ended June 30, 2021 or 2020.

During the six months ended June 30, 2021, two customers accounted for approximately 33% and 11% of the Company’s sales. No other customer accounted for more than 10% of sales during the six months ended June 30, 2021 or 2020.

Cash balances are maintained at large, well-established financial institutions. At times, cash balances exceed federally insured limits. Insurance coverage limits are $250,000 per depositor at each financial institution. The Company believes that no significant concentration of credit risk exists with respect to its cash balances because of its assessment of the creditworthiness and financial viability of the financial institutions that hold such cash balances.

Research and Development Costs

Research and development costs consist primarily of fees paid to consultants and outside service providers, and other expenses relating to the acquisition, design, development and testing of the Company’s Clinical Nutrition products. Research and development expenditures are expensed as incurred and totaled $16,756 and $44,581 for the three months ended June 30, 2021 and 2020, respectively, and $37,364 and $75,769 for the six months ended June 30, 2021 and 2020, respectively.

Patent Costs

The Company is the owner of four issued domestic patents, two pending domestic patent applications and one granted patent in Canada. Due to the significant uncertainty associated with the successful development of one or more commercially viable products based on the Company’s research efforts and any related patent applications, patent costs, including patent-related legal fees, filing fees and internally generated costs, are expensed as incurred. During the six months ended June 30, 2021, and 2020, patent costs were $34,940 and $60,501, respectively, and are included in general and administrative costs in the statements of operations.

Stock-Based Compensation

The Company periodically issues stock-based compensation to employees and non-employees in non-capital raising transactions for services and for financing costs. Such grants vest and expire according to terms established at the issuance date. The Company accounts for such grants issued and vesting based on ASC 718, Compensation-Stock Compensation whereby the value of the award is measured on the date of grant and recognized for employees as compensation expense on a straight-line or graded basis over the vesting period. Recognition of compensation expense for non-employees is 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 a period. 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. 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 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:

	June 30,
	2021		2020
Warrants		485,067		2,578,390
Options		978,087		486,524
		1,463,154		3,064,914

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 sale of an asset or paid to transfer a liability in an orderly transaction between market participants at 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 - Quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date.

Level 2 - Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

Level 3 - Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions.

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 Company believes the carrying amount of its financial instruments (consisting of cash, short-term investments, accounts receivable, and accounts payable and accrued liabilities) approximates fair value due to the short-term nature of such instruments.

At December 31, 2020, the Company’s balance sheets included Level 2 liabilities comprised of the fair value of warrant liabilities of $25,978 (see Note 9). At June 30, 2021, the Company had no warrant liabilities.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. As a smaller reporting company, ASU 2016-13 will be effective for the Company beginning January 1, 2023, with early adoption permitted. The Company is currently assessing the impact of adopting this standard on the Company’s financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 of the two-step goodwill impairment test, under which a goodwill impairment loss was measured by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-04 requires only a one-step quantitative impairment test, whereby a goodwill impairment loss is measured as the excess of a reporting unit’s carrying amount over its fair value (not to exceed the total goodwill allocated to that reporting unit). Entities are required to apply ASU 2017-04 on a prospective basis. ASU 2017-04 was effective January 1, 2020. The adoption of ASU 2017-04 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions and enhances and simplifies various aspects of the income tax accounting guidance in ASC 740. ASU 2019-12 was effective January 1, 2021. The adoption of ASU 2019-12 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In August 2020, the FASB issued 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) (“ASU 2020-06”). ASU 2020-06 reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. For contracts in an entity’s own equity, the type of contracts primarily affected by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. This update simplifies the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective January 1, 2024, for the Company and the provisions of this update can be adopted using either the modified retrospective method or a fully retrospective method. Early adoption is permitted, but no earlier than January 1, 2021.

At December 31, 2020, the Company had recorded a derivative liability of $25,978 related to 10,417 warrants issued in 2019 because the settlement provisions of the warrants contained language that the shares underlying the warrants are required to be registered. Effective January 1, 2021, the Company early adopted ASU 2020-06 using the modified retrospective approach. ASU 2020-06 removed the requirement to consider if the warrants would be settled in registered shares, and accordingly, the adoption of ASU 2020-06 resulted in a decrease to accumulated deficit of $25,978 and a decrease in derivative warrant liability of $25,978 on January 1, 2021.

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 (“ASU 2021-04”). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt ASU 2021-04 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The adoption of ASU 2021-04 is not expected to have any impact on the Company’s consolidated financial statement presentation or disclosures.

Other recent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

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Acquisition of Activ Nutritional, LLC.

6 Months Ended

Jun. 30, 2021

Business Combination and Asset Acquisition [Abstract]

Acquisition of Activ Nutritional, LLC.

3. Acquisition of Activ Nutritional, LLC.

On June 1, 2021, the Company completed the acquisition of Activ. The acquisition was made pursuant to an equity purchase agreement dated May 18, 2021 between the Company, Adare Pharmaceuticals, Inc., (“Adare”), and Activ. The Company acquired all of the issued and outstanding equity of Activ from Adare for $26,000,000 in cash, subject to certain adjustments as provided in the equity purchase agreement.

Activ owns the Viactiv® line of supplement chews for bone health, immune health and other applications which are currently marketed through many of the nation’s largest retailers, including, among others, Walmart (retail and online), Target and Amazon. The Viactiv product lines are expected to become the Company’s most prominent product lines for the foreseeable future.

The Company utilized the acquisition method of accounting for the acquisition in accordance with ASC 805, Business Combinations. The Company allocated the purchase price to Activ’s tangible assets, identifiable intangible assets, and assumed liabilities at their estimated fair values as of the date of acquisition. The fair value of the intangible assets was estimated using the income approach, pursuant to which after-tax cash flows are discounted to present value based on projections and other available financial data. The cash flows were based on estimates used to value the acquisition, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model, as well as the weighted average cost of capital. The valuation assumptions took into consideration the Company’s estimates of customer attrition and revenue growth projections. The excess of the purchase price paid by the Company over the estimated fair value of identified tangible and intangible assets has been recorded as goodwill.

The following table summarizes the allocation of the fair value of the purchase consideration to the fair value of tangible assets, identifiable intangible assets, and assumed liabilities of Activ on the date of acquisition:

Fair value of consideration :
Purchase price, as adjusted, paid in cash	$	26,044,570
Allocation of the consideration to the fair value of assets acquired and liabilities assumed:
Cash	$	8,468
Accounts receivable		1,799,695
Inventories		613,063
Prepaids		49,025
Accounts payable		(313,731	)
Net tangible assets		2,156,520
Trade names and trademarks		9,200,000
Customer relationships		2,700,000
Net identifiable intangible assets		11,900,000
Goodwill		11,988,050
Fair value of net assets acquired	$	26,044,570

The Company consolidated Activ’s operations with the Company’s operations commencing June 1, 2021, the closing date of the transaction. Activ’s operations are included in the Company’s Clinical Nutrition segment. The amount of revenue and net income of Activ included in the Company’s consolidated statements of operations during the three months and six months ended June 30, 2021, was $1,049,803 and $231,288, respectively.

Acquisition-related transaction costs (e.g., legal, due diligence, valuation, investment banking and other professional fees) are not included as a component of consideration transferred, but were expensed as incurred. During the three months and six months ended June 30, 2021, the Company incurred approximately $2,104,000 of acquisition-related costs, which are included as a line item in the Company’s consolidated statements of operations.

Pro Forma Information

The following unaudited pro forma condensed consolidated statement of operations for the three months and six months ended June 30, 2021 and 2020 is presented as if the acquisition of Activ had occurred on January 1, 2020, after giving effect to certain pro forma adjustments. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the acquisition had actually been consummated on January 1, 2020. These results are prepared in accordance with ASC 606.

	Unaudited Pro forma for the three months ended						Unaudited Pro forma for the six months ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Revenue	$	3,016,094		$	4,257,140		$	6,989,810		$	7,520,816
Net loss	$	(2,434,005	)	$	(815,869	)	$	(4,641,387	)	$	(5,282,721	)
Net loss per share-basic and diluted	$	(0.10	)	$	(0.06	)	$	(0.20	)	$	(0.38	)

Trade name and trademarks, and customer relationship intangible assets are being amortized over an estimated useful life of 10 years. The pro forma adjustments include a net increase in amortization expense to record amortization expense for the $11,900,000 of acquired net identifiable intangible assets, and an adjustment to present acquisition-related transaction costs and other one-time costs directly attributable to the acquisition as if they were incurred in the earliest period presented.

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Inventories

6 Months Ended

Jun. 30, 2021

Inventory Disclosure [Abstract]

Inventories

4. Inventories

Inventories consisted of the following:

	June 30,		December 31,
	2021		2020
Raw materials	$	69,904	$	218,307
Finished goods		886,355		166,665
	$	956,259	$	384,972

The Company’s inventories are stated at the lower of cost or net realizable value on a first-in, first-out (FIFO) basis.

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Property and Equipment, Net

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

5. Property and Equipment, Net

Property and equipment, net consisted of the following:

	June 30,			December 31,
	2021			2020
Leasehold improvements	$	103,255		$	103,255
Testing equipment		348,124			348,124
Furniture and fixtures		197,349			197,349
Computer equipment		69,602			68,460
Office equipment		9,835			9,835
		728,165			727,023
Less accumulated depreciation and amortization		(482,454	)		(441,347	)
	$	245,711		$	285,676

For the six months ended June 30, 2021 and 2020, depreciation and amortization expense was $41,107 and $46,619, respectively.

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Intangible Assets, Net

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets, Net

6. Intangible Assets, Net

Intangible assets, net consisted of the following:

	June 30,			December 31,
	2021			2020
Trade name	$	9,200,000		$	-
Customer relationships		2,700,000			-
Trademark		50,000			50,000
		11,950,000			50,000
Less accumulated amortization		(99,167	)		-
	$	11,850,833		$	50,000

The trade name and customer relationship were acquired June 1, 2021 in conjunction with the acquisition of Activ (see Note 3) and are being amortized over a period of 10 years. For the three months and six months ended June 30, 2021 and 2020, amortization expense was $99,167.

The expected future amortization expense for amortizable finite-lived intangible assets as of June 30, 2021 is as follows:

	Total
2021 (remaining 6 months)	$	595,000
2022		1,190,000
2023		1,190,000
2024		1,190,000
2025		1,190,000
Thereafter		6,445,833
Total future expected amortization expense	$	11,800,833

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Operating Leases

6 Months Ended

Jun. 30, 2021

Operating Leases

Operating Leases

7. Operating Leases

The Company leases an office and certain warehouse space under two operating leases. The Company accounts for its leases under ASC 842, Leases. During the three months ended June 30, 2021 and 2020, lease costs totaled $52,585 and $30,488, respectively, and during the six months ended June 30, 2021 and 2020, lease costs totaled $98,486 and $74,069, respectively.

As of December 31, 2020, the Company’s net right of use asset totaled $418,590. During the three months and six months ended June 30, 2021, the Company recorded amortization of right-of-use asset of $39,470 and $79,328, respectively. At June 30, 2021, the net right-of-use assets were $339,262.

As of December 31, 2020, the Company’s operating lease liabilities totaled $434,748. During the six months ended June 30, 2021, the Company made payments of $101,993 towards the operating lease liability. As of June 30, 2021, the operating lease liabilities totaled $355,127.

As of June 30, 2021, the weighted average remaining lease terms for operating leases are 2.04 years, and the weighted average discount rate for operating lease is 3.9%.

Future minimum lease payments under the leases are as follows:

Year ending	Operating Leases
Remainder of 2021	$	89,479
2022		182,249
2023		98,417
Total lease payments		370,145
Less: Imputed interest/present value discount		(15,018	)
Present value of lease liabilities		355,127
Less: Current portion		(168,700	)
	$	186,427

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Payable to Former Officer

6 Months Ended

Jun. 30, 2021

Payable To Former Officer

Payable to Former Officer

8. Payable to Former Officer

Effective June 15, 2020, Michael Favish resigned as Chief Executive Officer of the Company and also resigned from the Company’s Board of Directors. Terms of the settlement agreement between the parties included the continuation of his previous salary of $325,000 during the twelve months subsequent to his resignation. The $325,000 of aggregate settlement payments was recorded in costs related to resignation of former officer expense in the consolidated statements of operations during the three months and six months ended June 30, 2020. The final payment due the former officer was made on June 15, 2021.

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Derivative Liability

6 Months Ended

Jun. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Liability

9. Derivative Liability

On April 9, 2019, the Company issued 10,417 warrants with an exercise price of $30.00 per share to the underwriter in connection with the Company’s initial public offering. The Company accounted for these warrants as a derivative liability in the financial statements because they were associated with the initial public offering, which was a registered offering, and the settlement provisions contained language that the shares underlying the warrants were required to be registered. The fair value of the warrants was remeasured at each reporting period, and the change in the fair value was recognized in earnings in the statements of operations. At December 31, 2020, the fair value of the derivative warrant liability was $25,978.

Effective January 1, 2021, the Company early adopted ASU 2020-06 using the modified retrospective approach. ASU 2020-06 removed the requirement to consider if the warrants would be settled in registered shares, and accordingly, the adoption of ASU 2020-06 resulted in a decrease to accumulated deficit of $25,978 and a decrease in derivative warrant liability of $25,978 on January 1, 2021.

At December 31, 2020, the fair value of such warrant was determined to be $2.49 using the Black-Scholes option pricing model utilizing the following assumptions:

	Warrant Liability As of
	December 31, 2020
Stock price	$	2.49
Risk free interest rate		0.17	%
Expected volatility		148	%
Expected life in years		3.8
Expected dividend yield		0	%
Number of warrants		10,417
Fair value of warrants	$	25,978

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Stockholders’ Equity

6 Months Ended

Jun. 30, 2021

Equity [Abstract]

Stockholders’ Equity

10. Stockholders’ Equity

Common Stock

January 2021 and February 2021 At the Market Offerings

On January 8, 2021, the Company entered into a sales agreement with Maxim Group LLC (“Maxim”) pursuant to which the Company could sell up to $10,000,000 worth of shares of common stock in an “at the market” offering through Maxim (the “January 2021 1st ATM Offering”). The offer and sale of the shares was made pursuant to a shelf registration statement on Form S-3. The Company agreed to pay Maxim a commission equal to 3.0% of the aggregate gross proceeds from each sale of shares. On January 15, 2021, the Company completed the January 2021 1st ATM Offering, pursuant to which the Company sold an aggregate of 2,559,834 shares of its common stock and raised net proceeds (after deduction for sales commissions) of approximately $9,700,000.

On January 28, 2021, the Company entered into a sales agreement with Maxim pursuant to which the Company could sell up to $25,000,000 worth of shares of common stock in an “at the market” offering through Maxim (the “January 2021 2nd ATM Offering”). On February 10, 2021, the Company completed the January 2021 2nd ATM Offering, pursuant to which the Company sold an aggregate of 5,048,840 shares of its common stock and raised net proceeds (after deduction for sales commissions) of approximately $24,250,000.

The Company incurred costs related to these financings of approximately $327,000 which is reflected as a reduction to the proceeds from the shares issued. The net cash received from both offerings after all expenses was approximately $33,623,000.

Warrants

A summary of the Company’s warrant activity is as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
December 31, 2020		2,132,758		$	2.48		3.81
Granted		-			-		-
Forfeitures		-			-		-
Expirations		-			-		-
Exercised		(1,647,691	)		2.26		-
June 30, 2021, all exercisable		485,067			2.71		3.31

The exercise prices of warrants outstanding and exercisable as of June 30, 2021 are as follows:

Warrants Outstanding and Exercisable (Shares)		Exercise Prices
	160,108	$	2.05
	146,667		2.67
	112,001		3.30
	37,700		3.51
	18,174		17.25
	10,417		30.00
	485,067

During the six months ended June 30, 2021, investors exercised a total of 1,647,691 warrants for 1,647,691 shares of common stock. The warrants were exercisable for an average price of $2.26 per share, which resulted in cash proceeds to the Company of $3,568,415.

Stock Options

A summary of the Company’s stock option activity is as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
December 31, 2020		778,196			9.32		6.38
Granted		269,339			2.98		9.80
Forfeitures		(69,445	)		26.40		-
Expirations		-			-		-
Exercised		-			-		-
June 30, 2021, outstanding		978,090		$	6.48		7.20
June 30, 2021, exercisable		547,631		$	8.50		5.40

The exercise prices of options outstanding and exercisable as of June 30, 2021 are as follows:

Options Outstanding		Exercise Prices
(Shares)
	41,667		1.48
	50,000		1.61
	66,668		1.76
	5,001		1.91
	41,667		2.33
	1,667		2.46
	16,667		3.25
	152,671		3.95
	375,000		6
	104,167		12
	10,415		13.8
	112,500		15
	978,090

During the six months ended June 30, 2021, the Company granted options to purchase 269,339 shares of common stock to employees and members of the Board of Directors with a grant date fair value of $652,360 using a Black-Scholes option pricing model based on the following assumptions: (i) volatility rates of 117% to 119%, (ii) discount rates of 0.38% to 1.28%, (iii) zero expected dividend yield, and (iv) expected life of 6 years. The options have an exercise price of $1.61 to $3.95 per share. 67,558 of the options will vest on the one-year anniversary of the grant date and the remaining 135,113 options will vest on monthly basis over two years. Options for 66,668 shares vest ratably over three years. As part of their annual compensation for service on the Board of Directors, each of the four non-officer directors receives annual stock option grant for 16,333 shares of the Company’s common stock on the earlier of the annual meeting of stockholders or June 30. The option shall vest and become exercisable in eight equal installments on the last day of each of the subsequent eight calendar quarter-end dates following the date of grant.

The volatility of the Company’s common stock is based on an average volatility of similar companies in the same industry. The risk-free interest rate was based on rates established by the Federal Reserve Bank. The expected dividend yield was based on the fact that the Company has not paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future. The expected life of the stock options granted is estimated using the “simplified” method, whereby the expected term equals the average of the vesting term and the original contract.

During the six months ended June 30, 2021 and 2020, the Company recognized stock-compensation expense related to the fair value of vested stock options of $389,224 and $(940,936), respectively, which was recorded in general and administrative expense.

As of June 30, 2021, the Company had an aggregate of 472,131 remaining unvested options outstanding, with a remaining fair value of $715,836, with a weighted average remaining life of 9.31 years. The aggregate intrinsic value of options outstanding as of June 30, 2021 was $19,208.

Restricted Common Stock

In January 2021, the Company granted 152,671 shares of the Company’s common stock to the Company’s Chief Executive Officer (“CEO”). The shares vest on the first anniversary of the award. If the CEO’s employment with the Company is terminated for any reason, any shares not then vested will be forfeited. Also effective in January 2021, the Company granted 41,667 shares of the Company’s common stock to a consultant for services, with 4,167 of the shares vesting immediately and the balance of 37,500 shares vesting through August 15, 2021. In the event the consultant’s service with the Company terminates, any shares not then vested will be forfeited. During the quarter ended June 30, 2021 the Company granted 50,000 shares of the Company’s common stock with vesting terms to the Company’s Chief Commercial Officer. The shares vest one third per year for three years on the anniversary of the award.

The total fair value of the 244,338 shares was determined to be $742,912 based on the price per shares of the Company’s common stock on the dates granted. The Company accounts for the share awards using the straight-line attribution or graded vesting method over the requisite service period provided that the amount of compensation cost recognized at any date is no less than the portion of the grant-date fair value of the award that is vested at that date. During the six months ended June 30, 2021, total share-based expense recognized related to vested restricted shares totaled $365,295. At June 30, 2021, there was $1,035,796 of unvested compensation related to these awards that will be amortized over a remaining vesting period of 3.3 years.

The following table summarizes restricted common stock activity for the six months ended June 30, 2021:

	Number of shares			Fair value of shares
Non-vested shares, December 31, 2020		30,000		$	1.41
Granted		202,671			3.95
Vested		(22,500	)		(1.41	)
Forfeited
Non-vested shares, June 30, 2021		210,171		$	3.00

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Related Party Transactions

6 Months Ended

Jun. 30, 2021

Related Party Transactions [Abstract]

Related Party Transactions

11. Related Party Transactions

David Evans, Ph.D., was the interim chief executive officer of the Company from June 12, 2020 to January 6, 2021, and together with his spouse, wholly owns Ceatus Media Group LLC (“Ceatus”) and DWT Evans LLC (“DWT”). For the three months and six months ended June 30, 2021 and 2020 the Company paid Ceatus $19,500 and $13,750, and $42,000 and $27,500, respectively, for services related to digital marketing for the Company. The Company’s wholly owned subsidiary, VectorVision Ocular Health, leases office and warehouse space from DWT. For the six months ended June 30, 2021 and 2020, the Company paid DWT rent in the amounts of $11,142 and $10,708, respectively

In September 2017, the Company acquired VectorVision, Inc. from David Evans. At the same time, the Company also acquired AcQviz from David Evans, which is a patented methodology for auto-calibrating and standardizing the testing light level for computer generated vision testing systems. David Evans is entitled to receive a royalty on net revenue from AcQviz. As part of the development of the CSV-2000, AcQviz was embedded in the product by Radiant Technologies, Inc. in exchange for a 3% royalty on the sales of AcQviz. Radiant Technologies is owned by Joseph Evans, the brother of David Evans. During the three months and six months ended June 30, 2021 and 2020, the Company did not incur any royalties with respect to revenues from AcQviz.

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Segment Reporting

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Segment Reporting

12. Segment Reporting

The Company determined its reporting units in accordance with ASC 280, “Segment Reporting”. The Company currently operates in two reportable segments: Clinical Nutrition and Diagnostics Equipment.

The Clinical Nutrition segment provides a portfolio of science-based, clinically supported nutrition, medical foods, and supplements. The Diagnostics Equipment segment includes a portfolio of medical diagnostic devices currently focused on the ocular space and contrast testing. The Company’s diagnostics equipment and accessories are used to measure visual function and certain anatomical features of the eye that detect early disease and monitor changes over time.

The segments are based on the discrete financial information reviewed by the Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), to make resource allocation decisions and to evaluate performance. The reportable segments are each managed separately because they manufacture and distribute distinct products or provide services with different processes. All reported segment revenues are derived from external customers.

The accounting policies of the Company’s reportable segments are the same as those described in the summary of significant accounting policies (see Note 2). Certain corporate general and administrative expenses, including general overhead functions such as information systems, accounting, human resources, Board of Director fees, corporate legal fees, other compliance costs and certain administrative expenses, as well as interest and tax expense, are not allocated to the segments. The following tables set forth our results of operations by segment:

	For the Three Months Ended June 30, 2021
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	-		$	1,171,445		$	52,275		$	1,223,720
Cost of goods sold		-			639,188			26,031			665,219
Gross profit		-			532,257			26,244			558,501
Stock compensation expense		343,092			-			-			343,092
Operating expenses		2,759,319			1,938,799			57,845			4,755,963
Loss from operations	$	(3,102,411	)	$	(1,406,542	)	$	(31,601	)	$	(4,540,554	)

	For the Three Months Ended June 30, 2020
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	2,700		$	1,152,894		$	35,315		$	1,190,909
Cost of goods sold		1,096			628,205			15,278			644,579
Gross profit		1,604			524,689			20,037			546,330
Stock compensation expense		(1,335,441	)		-			-			(1,335,441	)
Operating expenses		1,423,869			1,072,508			93,620			2,589,997
Loss from operations	$	(86,824	)	$	(547,819	)	$	(73,583	)	$	(708,226	)

	For the Six Months Ended June 30, 2021
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	-		$	1,333,588		$	123,429		$	1,457,017
Cost of goods sold		-			724,105			74,150			798,255
Gross profit		-			609,483			49,279			658,762
Stock compensation expense		730,707			-			-			730,707
Operating expenses		3,909,898			3,114,926			113,310			7,138,134
Loss from operations	$	(4,640,605	)	$	(2,505,443	)	$	(64,031	)	$	(7,210,079	)

	For the Six Months Ended June 30, 2020
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	6,100		$	1,304,028		$	126,505		$	1,436,633
Cost of goods sold		2,477			695,291			55,920			753,688
Gross profit		3,623			608,737			70,585			682,945
Stock compensation expense		(831,573	)		-			-			(831,573	)
Operating expenses		1,004,484			3,344,411			210,070			4,558,965
Loss from operations	$	(169,288	)	$	(2,735,674	)	$	(139,485	)	$	(3,044,447	)

The following tables set forth our total assets by segment. Intersegment balances and transactions have been removed:

	As of June 30, 2021
	Corporate		Clinical Nutrition		Diagnostics Equipment		Total
Current assets
Cash	$	5,502,411	$	-	$	-	$	5,502,411
Short-term investments		7,000,266		-		-		7,000,266
Inventories		-		835,643		120,616		956,259
Accounts receivable		-		1,857,952		26,830		1,884,782
Other		-		1,072,918		130,251		1,203,169
Total current assets		12,502,677		3,766,513		277,697		16,546,887
Right of use asset, net		-		304,961		34,301		339,262
Property and equipment, net		-		113,945		131,766		245,711
Intangible assets, net		-		11,850,833		-		11,850,833
Goodwill		-		11,988,050		-		11,988,050
Other		-		314,082		-		314,082
Total assets	$	12,502,677	$	28,338,384	$	443,764	$	41,284,825

	As of December 31, 2020
	Corporate		Clinical Nutrition		Diagnostics Equipment		Total
Current assets
Cash	$	8,518,732	$	-	$	-	$	8,518,732
Inventories		-		254,879		130,093		384,972
Other		-		89,333		101,846		191,179
Total current assets		8,518,732		344,212		231,939		9,094,883
Right of use asset		-		374,447		44,143		418,590
Property and equipment, net		-		135,641		150,035		285,676
Intangible assets, net		-		50,000		-		50,000
Other		-		11,751		-		11,751
Total assets	$	8,518,732	$	916,051	$	426,117	$	9,860,900

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

13. Commitments and Contingencies

The Company is periodically the subject of various pending or threatened legal actions and claims arising out of its operations in the normal course of business. In the opinion of management of the Company, adequate provision has been made in the Company’s financial statements at June 30, 2021 and December 31, 2020 with respect to any such matters.

Effective January 6, 2021, the Board of Directors appointed Bret Scholtes as President, Chief Executive Officer, and as a director of the Company. The Company and Mr. Scholtes entered into an employment agreement pursuant to which Mr. Scholtes’ annual base salary is $400,000. The employment agreement provides that Mr. Scholtes shall have an annual target cash bonus of no less than $400,000 based on performance objectives determined by the Board of Directors.

Additionally, Mr. Scholtes shall be granted (i) stock options equal to 2% of the Company’s issued and outstanding shares of common stock on the date of grant if the Company achieves certain specified performance objectives established by the Board of Directors for the Company’s fiscal years ending December 31, 2021, and December 31, 2022, and (ii) additional stock options equal to either 2% or 3% of the Company’s issued and outstanding shares of common stock on the date of grant if the Company meets certain financial objectives during the first five years following January 6, 2021. If Mr. Scholtes’ employment is terminated by the Company without cause, as defined under his employment agreement, if the term expires after a notice of non-renewal is delivered by the Company, or if Mr. Scholtes’ employment is terminated following a change of control, as defined, Mr. Scholtes will be entitled to (a) twelve months’ base salary, (b) the prorated portion of the any bonus, based on actual performance, and (c) base salary and benefits accrued through the date of termination.

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Subsequent Events

6 Months Ended

Jun. 30, 2021

Subsequent Events [Abstract]

Subsequent Events

14. Subsequent Events

The Company performed an evaluation of subsequent events through the date of filing of these consolidated financial statements with the SEC. There were no material subsequent events which affected, or could affect, the amounts or disclosures in the consolidated financial statements.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed with the SEC. The condensed consolidated balance sheet as of December 31, 2020 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including notes, required by GAAP.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company’s financial position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. 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, 2021.

Reverse Stock Split

Reverse Stock Split

On March 1, 2021, following stockholder and board approval, the Company effectuated a 1-for-6 reverse split of its issued and outstanding shares of common stock, without any change to its par value. The authorized number of shares of common stock were not affected by the reverse stock split. No fractional shares were issued in connection with the reverse stock split, as all fractional shares were rounded up to the next whole share.

Accordingly, all share and per share amounts presented herein with respect to common stock have been retroactively adjusted to reflect the above-described reverse stock split for all periods presented.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, VectorVision Ocular Health, Inc., NutriGuard Formulations, Inc., Transcranial Doppler Solutions, Inc, and Activ Nutritional, LLC. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

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. 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 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 from those estimates.

Revenue Recognition

Revenue Recognition

The Company generates its revenue from two business segments:

● Clinical Nutrition

● Diagnostics Equipment

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Revenue is recognized when control of promised goods or services is transferred to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those products or services. The Company reviews its sales transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable.

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.

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. Historically the Company has not experienced any significant payment delays from customers.

In certain circumstances, returns of products are allowed. A right of return does not represent a separate performance obligation, but because customers are allowed to return products, the consideration to which the Company expects to be entitled is variable. Upon evaluation of historical product returns, the Company determined it is probable that such returns will not cause a significant reversal of revenue in the future. Due to the insignificant amount of historical returns, as well as the standalone nature of the Company’s products and 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 segment are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Clinical nutrition	$	1,171,445	$	1,152,894	$	1,333,588	$	1,304,028
Diagnostics equipment		52,275		35,315		123,429		126,505
Other		-		2,700		-		6,100
	$	1,223,720	$	1,190,909	$	1,457,017	$	1,436,633

The Company’s Clinical Nutrition revenues earned during the three months and six months ended June 30, 2021 and 2020 are derived from distributors and individual retail customers in North America. Diagnostics Equipment revenues are derived from a worldwide customer base consisting of both retail customers and distributors. Sales to distributors were approximately 81% and 58% of total revenues for the six months ended June 30, 2021 and 2020, respectively, which included the Viactiv® product line from June 1, 2021 through June 30, 2021.

Revenues by geographical area are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
North America	$	1,176,608	$	270,664	$	1,348,748	$	505,023
Malaysia		-		890,000		-		890,000
Asia - other		29,787		22,990		88,049		25,790
Europe and other		17,325		7,255		20,220		15,820
	$	1,223,720	$	1,190,909	$	1,457,017	$	1,436,633

Business Combinations

Business Combinations

The Company accounts for its business combinations using the acquisition method of accounting where the purchase consideration is allocated to the tangible and intangible assets acquired, and liabilities assumed, based on their respective fair values as of the acquisition date. The excess of the fair value of the purchase consideration over the estimated fair values of the net assets acquired is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth and margins, future changes in technology, brand awareness and discount rates. Fair value estimates are based on the assumptions that management believes a market participant would use in pricing the asset or liability.

Investments

Investments

Short-term investments as of June 30, 2021, consist of a U.S. Treasury Bill, which is classified as held-to-maturity. The Company’s U.S. Treasury Bill matured July 29, 2021 and the proceeds were reinvested into another U.S. Treasury Bill that is scheduled to mature approximately 30 days from the date of purchase. Unrealized gains and losses were de minimus. As of June 30, 2021, the carrying value of the Company’s U.S. Treasury Bill approximates its fair value due to its short-term maturity.

Accounts Receivable

Accounts Receivable

Accounts receivable are recorded net of an allowance for expected losses. Management evaluates the collectability of its trade accounts receivable and determines an allowance for doubtful accounts based on historical write-offs, known or expected trends, and the identification of specific balances deemed uncollectible based on a customer’s financial condition, credit history and the current economic conditions.

There was no allowance for doubtful accounts as of June 30, 2021 and December 31,2020.

Inventories

Inventories

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out (“FIFO”) basis. The Company records adjustments to its inventory for estimated obsolescence or diminution in net realizable value equal to the difference between the cost of the inventory and the estimated net realizable value. When evidence exists that the net realizable value of inventory is lower than its cost, the difference is recognized as a loss in the period in which it occurs. Once inventory has been written down, it creates a new cost basis for inventory that may not subsequently written up. For the three months and six months ended June 30, 2021 and 2020, there were no write-downs of inventory.

Intangible Assets

Intangible Assets

Amortizable finite-lived identifiable intangible assets consist of a trade name and customer relationships acquired in the acquisition of Activ effective June 1,2021 (See Note 3), and are stated at cost less accumulated amortization. The trade name and customer relationships are being amortized over a period of 10 years. The Company follows ASC 360 in accounting for finite-lived intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts. As of June 30, 2021, the Company determined there were no indicators of impairment of its intangible assets.

At June 30, 2021 and December 31, 2020, the Company has a trademark for $50,000 classified as an indefinite-lived intangible asset.

Goodwill

 Goodwill

Goodwill consists of the excess of the cost of Activ (see Note 3) over the fair value of amounts assigned to assets acquired and liabilities assumed. Under the guidance of ASC 350, goodwill is not amortized, rather it is tested for impairment annually, and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. An impairment loss generally would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit and would be measured as the excess carrying value of goodwill over the derived fair value of goodwill. The Company’s policy is to perform an annual impairment testing for its reporting units on December 31 of each fiscal year.

Concentrations

Concentrations

During the three months ended June 30, 2021, two customers accounted for approximately 39% and 13% of the Company’s sales. No other customer accounted for more than 10% of sales during the three months ended June 30, 2021 or 2020.

During the six months ended June 30, 2021, two customers accounted for approximately 33% and 11% of the Company’s sales. No other customer accounted for more than 10% of sales during the six months ended June 30, 2021 or 2020.

Cash balances are maintained at large, well-established financial institutions. At times, cash balances exceed federally insured limits. Insurance coverage limits are $250,000 per depositor at each financial institution. The Company believes that no significant concentration of credit risk exists with respect to its cash balances because of its assessment of the creditworthiness and financial viability of the financial institutions that hold such cash balances.

Research and Development Costs

Research and Development Costs

Research and development costs consist primarily of fees paid to consultants and outside service providers, and other expenses relating to the acquisition, design, development and testing of the Company’s Clinical Nutrition products. Research and development expenditures are expensed as incurred and totaled $16,756 and $44,581 for the three months ended June 30, 2021 and 2020, respectively, and $37,364 and $75,769 for the six months ended June 30, 2021 and 2020, respectively.

Patent Costs

Patent Costs

The Company is the owner of four issued domestic patents, two pending domestic patent applications and one granted patent in Canada. Due to the significant uncertainty associated with the successful development of one or more commercially viable products based on the Company’s research efforts and any related patent applications, patent costs, including patent-related legal fees, filing fees and internally generated costs, are expensed as incurred. During the six months ended June 30, 2021, and 2020, patent costs were $34,940 and $60,501, respectively, and are included in general and administrative costs in the statements of operations.

Stock-Based Compensation

Stock-Based Compensation

The Company periodically issues stock-based compensation to employees and non-employees in non-capital raising transactions for services and for financing costs. Such grants vest and expire according to terms established at the issuance date. The Company accounts for such grants issued and vesting based on ASC 718, Compensation-Stock Compensation whereby the value of the award is measured on the date of grant and recognized for employees as compensation expense on a straight-line or graded basis over the vesting period. Recognition of compensation expense for non-employees is 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

Loss per Common Share

Basic loss per share is computed by dividing net loss by the weighted-average common shares outstanding during a period. 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. 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 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:

	June 30,
	2021		2020
Warrants		485,067		2,578,390
Options		978,087		486,524
		1,463,154		3,064,914

Fair Value of Financial Instruments

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 sale of an asset or paid to transfer a liability in an orderly transaction between market participants at 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 - Quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date.

Level 2 - Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

Level 3 - Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions.

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 Company believes the carrying amount of its financial instruments (consisting of cash, short-term investments, accounts receivable, and accounts payable and accrued liabilities) approximates fair value due to the short-term nature of such instruments.

At December 31, 2020, the Company’s balance sheets included Level 2 liabilities comprised of the fair value of warrant liabilities of $25,978 (see Note 9). At June 30, 2021, the Company had no warrant liabilities.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. As a smaller reporting company, ASU 2016-13 will be effective for the Company beginning January 1, 2023, with early adoption permitted. The Company is currently assessing the impact of adopting this standard on the Company’s financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 of the two-step goodwill impairment test, under which a goodwill impairment loss was measured by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-04 requires only a one-step quantitative impairment test, whereby a goodwill impairment loss is measured as the excess of a reporting unit’s carrying amount over its fair value (not to exceed the total goodwill allocated to that reporting unit). Entities are required to apply ASU 2017-04 on a prospective basis. ASU 2017-04 was effective January 1, 2020. The adoption of ASU 2017-04 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions and enhances and simplifies various aspects of the income tax accounting guidance in ASC 740. ASU 2019-12 was effective January 1, 2021. The adoption of ASU 2019-12 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In August 2020, the FASB issued 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) (“ASU 2020-06”). ASU 2020-06 reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. For contracts in an entity’s own equity, the type of contracts primarily affected by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. This update simplifies the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective January 1, 2024, for the Company and the provisions of this update can be adopted using either the modified retrospective method or a fully retrospective method. Early adoption is permitted, but no earlier than January 1, 2021.

At December 31, 2020, the Company had recorded a derivative liability of $25,978 related to 10,417 warrants issued in 2019 because the settlement provisions of the warrants contained language that the shares underlying the warrants are required to be registered. Effective January 1, 2021, the Company early adopted ASU 2020-06 using the modified retrospective approach. ASU 2020-06 removed the requirement to consider if the warrants would be settled in registered shares, and accordingly, the adoption of ASU 2020-06 resulted in a decrease to accumulated deficit of $25,978 and a decrease in derivative warrant liability of $25,978 on January 1, 2021.

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 (“ASU 2021-04”). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt ASU 2021-04 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The adoption of ASU 2021-04 is not expected to have any impact on the Company’s consolidated financial statement presentation or disclosures.

Other recent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Schedule of Revenues by Segment

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Clinical nutrition	$	1,171,445	$	1,152,894	$	1,333,588	$	1,304,028
Diagnostics equipment		52,275		35,315		123,429		126,505
Other		-		2,700		-		6,100
	$	1,223,720	$	1,190,909	$	1,457,017	$	1,436,633

Schedule of Revenue by Geographical Area

Revenues by geographical area are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
North America	$	1,176,608	$	270,664	$	1,348,748	$	505,023
Malaysia		-		890,000		-		890,000
Asia - other		29,787		22,990		88,049		25,790
Europe and other		17,325		7,255		20,220		15,820
	$	1,223,720	$	1,190,909	$	1,457,017	$	1,436,633

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share:

	June 30,
	2021		2020
Warrants		485,067		2,578,390
Options		978,087		486,524
		1,463,154		3,064,914

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Acquisition of Activ Nutritional, LLC. (Tables)

6 Months Ended

Jun. 30, 2021

Business Combination and Asset Acquisition [Abstract]

Schedule of Fair Value of Assets Acquired and Liabilities Assumed

The following table summarizes the allocation of the fair value of the purchase consideration to the fair value of tangible assets, identifiable intangible assets, and assumed liabilities of Activ on the date of acquisition:

Fair value of consideration :
Purchase price, as adjusted, paid in cash	$	26,044,570
Allocation of the consideration to the fair value of assets acquired and liabilities assumed:
Cash	$	8,468
Accounts receivable		1,799,695
Inventories		613,063
Prepaids		49,025
Accounts payable		(313,731	)
Net tangible assets		2,156,520
Trade names and trademarks		9,200,000
Customer relationships		2,700,000
Net identifiable intangible assets		11,900,000
Goodwill		11,988,050
Fair value of net assets acquired	$	26,044,570

Schedule of Pro Forma Financial Information

	Unaudited Pro forma for the three months ended						Unaudited Pro forma for the six months ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Revenue	$	3,016,094		$	4,257,140		$	6,989,810		$	7,520,816
Net loss	$	(2,434,005	)	$	(815,869	)	$	(4,641,387	)	$	(5,282,721	)
Net loss per share-basic and diluted	$	(0.10	)	$	(0.06	)	$	(0.20	)	$	(0.38	)

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Inventories (Tables)

6 Months Ended

Jun. 30, 2021

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consisted of the following:

	June 30,		December 31,
	2021		2020
Raw materials	$	69,904	$	218,307
Finished goods		886,355		166,665
	$	956,259	$	384,972

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Property and Equipment, Net (Tables)

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment, net consisted of the following:

	June 30,			December 31,
	2021			2020
Leasehold improvements	$	103,255		$	103,255
Testing equipment		348,124			348,124
Furniture and fixtures		197,349			197,349
Computer equipment		69,602			68,460
Office equipment		9,835			9,835
		728,165			727,023
Less accumulated depreciation and amortization		(482,454	)		(441,347	)
	$	245,711		$	285,676

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Intangible Assets, Net (Tables)

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

Intangible assets, net consisted of the following:

	June 30,			December 31,
	2021			2020
Trade name	$	9,200,000		$	-
Customer relationships		2,700,000			-
Trademark		50,000			50,000
		11,950,000			50,000
Less accumulated amortization		(99,167	)		-
	$	11,850,833		$	50,000

Schedule of Finite-lived Intangible Assets Amortization Expense

The expected future amortization expense for amortizable finite-lived intangible assets as of June 30, 2021 is as follows:

	Total
2021 (remaining 6 months)	$	595,000
2022		1,190,000
2023		1,190,000
2024		1,190,000
2025		1,190,000
Thereafter		6,445,833
Total future expected amortization expense	$	11,800,833

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Operating Leases (Tables)

6 Months Ended

Jun. 30, 2021

Operating Leases

Schedule of Lease Liability

Future minimum lease payments under the leases are as follows:

Year ending	Operating Leases
Remainder of 2021	$	89,479
2022		182,249
2023		98,417
Total lease payments		370,145
Less: Imputed interest/present value discount		(15,018	)
Present value of lease liabilities		355,127
Less: Current portion		(168,700	)
	$	186,427

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Derivative Liability (Tables)

6 Months Ended

Jun. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Fair Value Assumptions of Warrant Liability

At December 31, 2020, the fair value of such warrant was determined to be $2.49 using the Black-Scholes option pricing model utilizing the following assumptions:

	Warrant Liability As of
	December 31, 2020
Stock price	$	2.49
Risk free interest rate		0.17	%
Expected volatility		148	%
Expected life in years		3.8
Expected dividend yield		0	%
Number of warrants		10,417
Fair value of warrants	$	25,978

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Stockholders’ Equity (Tables)

6 Months Ended

Jun. 30, 2021

Equity [Abstract]

Schedule of Warrants Activity

A summary of the Company’s warrant activity is as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
December 31, 2020		2,132,758		$	2.48		3.81
Granted		-			-		-
Forfeitures		-			-		-
Expirations		-			-		-
Exercised		(1,647,691	)		2.26		-
June 30, 2021, all exercisable		485,067			2.71		3.31

Schedule of Exercise Price of Warrants Outstanding and Exercisable

The exercise prices of warrants outstanding and exercisable as of June 30, 2021 are as follows:

Warrants Outstanding and Exercisable (Shares)		Exercise Prices
	160,108	$	2.05
	146,667		2.67
	112,001		3.30
	37,700		3.51
	18,174		17.25
	10,417		30.00
	485,067

Schedule of Share-based Compensation, Stock Options, Activity

A summary of the Company’s stock option activity is as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
December 31, 2020		778,196			9.32		6.38
Granted		269,339			2.98		9.80
Forfeitures		(69,445	)		26.40		-
Expirations		-			-		-
Exercised		-			-		-
June 30, 2021, outstanding		978,090		$	6.48		7.20
June 30, 2021, exercisable		547,631		$	8.50		5.40

Schedule of Exercise Price of Options Outstanding and Exercisable

The exercise prices of options outstanding and exercisable as of June 30, 2021 are as follows:

Options Outstanding		Exercise Prices
(Shares)
	41,667		1.48
	50,000		1.61
	66,668		1.76
	5,001		1.91
	41,667		2.33
	1,667		2.46
	16,667		3.25
	152,671		3.95
	375,000		6
	104,167		12
	10,415		13.8
	112,500		15
	978,090

Schedule of Non Vested Restricted Common Stock Activity

The following table summarizes restricted common stock activity for the six months ended June 30, 2021:

	Number of shares			Fair value of shares
Non-vested shares, December 31, 2020		30,000		$	1.41
Granted		202,671			3.95
Vested		(22,500	)		(1.41	)
Forfeited
Non-vested shares, June 30, 2021		210,171		$	3.00

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Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

	For the Three Months Ended June 30, 2021
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	-		$	1,171,445		$	52,275		$	1,223,720
Cost of goods sold		-			639,188			26,031			665,219
Gross profit		-			532,257			26,244			558,501
Stock compensation expense		343,092			-			-			343,092
Operating expenses		2,759,319			1,938,799			57,845			4,755,963
Loss from operations	$	(3,102,411	)	$	(1,406,542	)	$	(31,601	)	$	(4,540,554	)

	For the Three Months Ended June 30, 2020
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	2,700		$	1,152,894		$	35,315		$	1,190,909
Cost of goods sold		1,096			628,205			15,278			644,579
Gross profit		1,604			524,689			20,037			546,330
Stock compensation expense		(1,335,441	)		-			-			(1,335,441	)
Operating expenses		1,423,869			1,072,508			93,620			2,589,997
Loss from operations	$	(86,824	)	$	(547,819	)	$	(73,583	)	$	(708,226	)

	For the Six Months Ended June 30, 2021
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	-		$	1,333,588		$	123,429		$	1,457,017
Cost of goods sold		-			724,105			74,150			798,255
Gross profit		-			609,483			49,279			658,762
Stock compensation expense		730,707			-			-			730,707
Operating expenses		3,909,898			3,114,926			113,310			7,138,134
Loss from operations	$	(4,640,605	)	$	(2,505,443	)	$	(64,031	)	$	(7,210,079	)

	For the Six Months Ended June 30, 2020
	Corporate			Clinical Nutrition			Diagnostics Equipment			Total
Revenue	$	6,100		$	1,304,028		$	126,505		$	1,436,633
Cost of goods sold		2,477			695,291			55,920			753,688
Gross profit		3,623			608,737			70,585			682,945
Stock compensation expense		(831,573	)		-			-			(831,573	)
Operating expenses		1,004,484			3,344,411			210,070			4,558,965
Loss from operations	$	(169,288	)	$	(2,735,674	)	$	(139,485	)	$	(3,044,447	)

The following tables set forth our total assets by segment. Intersegment balances and transactions have been removed:

	As of June 30, 2021
	Corporate		Clinical Nutrition		Diagnostics Equipment		Total
Current assets
Cash	$	5,502,411	$	-	$	-	$	5,502,411
Short-term investments		7,000,266		-		-		7,000,266
Inventories		-		835,643		120,616		956,259
Accounts receivable		-		1,857,952		26,830		1,884,782
Other		-		1,072,918		130,251		1,203,169
Total current assets		12,502,677		3,766,513		277,697		16,546,887
Right of use asset, net		-		304,961		34,301		339,262
Property and equipment, net		-		113,945		131,766		245,711
Intangible assets, net		-		11,850,833		-		11,850,833
Goodwill		-		11,988,050		-		11,988,050
Other		-		314,082		-		314,082
Total assets	$	12,502,677	$	28,338,384	$	443,764	$	41,284,825

	As of December 31, 2020
	Corporate		Clinical Nutrition		Diagnostics Equipment		Total
Current assets
Cash	$	8,518,732	$	-	$	-	$	8,518,732
Inventories		-		254,879		130,093		384,972
Other		-		89,333		101,846		191,179
Total current assets		8,518,732		344,212		231,939		9,094,883
Right of use asset		-		374,447		44,143		418,590
Property and equipment, net		-		135,641		150,035		285,676
Intangible assets, net		-		50,000		-		50,000
Other		-		11,751		-		11,751
Total assets	$	8,518,732	$	916,051	$	426,117	$	9,860,900

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Organization and Business Operations (Details Narrative) - USD ($)	3 Months Ended				6 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net loss	$ 4,540,288	$ 2,669,525	$ 707,160	$ 2,346,913	$ 7,209,813	$ 3,054,073
Cash in operating activities					7,285,354	$ 4,020,731
Cash and short-term investments	12,502,677				12,502,677
Working capital	$ 14,741,926				$ 14,741,926

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Schedule of Revenues by Segment (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Product Information [Line Items]
Total revenue	$ 1,223,720	$ 1,190,909	$ 1,457,017	$ 1,436,633
Clinical Nutrition [Member]
Product Information [Line Items]
Total revenue	1,171,445	1,152,894	1,333,588	1,304,028
Diagnostics Equipment [Member]
Product Information [Line Items]
Total revenue	52,275	35,315	123,429	126,505
Other [Member]
Product Information [Line Items]
Total revenue		$ 2,700		$ 6,100

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Schedule of Revenue by Geographical Area (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Revenues	$ 1,223,720	$ 1,190,909	$ 1,457,017	$ 1,436,633
North America [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Revenues	1,176,608	270,664	1,348,748	505,023
MALAYSIA
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Revenues		890,000		890,000
Asia [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Revenues	29,787	22,990	88,049	25,790
Europe and Other [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Revenues	$ 17,325	$ 7,255	$ 20,220	$ 15,820

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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	1,463,154	3,064,914
Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	485,067	2,578,390
Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	978,087	486,524

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Summary of Significant Accounting Policies (Details Narrative) - USD ($)			3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 01, 2021	Jan. 02, 2021	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Product Information [Line Items]
Stockholders' Equity, Reverse Stock Split	1-for-6 reverse split
Revenue percentage					81.00%	58.00%
Accounts Receivable, Allowance for Credit Loss, Current			$ 0		$ 0		$ 0
Inventory write-downs			0	$ 0	0	$ 0
Impairment of intangible assets					0
Amount paid as deposit					250,000
Research and development costs			16,756	44,581	37,364	75,769
Patent costs					34,940	60,501
Fair Value Adjustment of Warrants					0		25,978
Accumulated deficit			(61,266,876)		(61,266,876)		(54,083,328)
Increase decrease in derivative warrant liability				$ 2,856		$ (6,088)
Underwriters [Member]
Product Information [Line Items]
Accumulated deficit		$ 25,978
Increase decrease in derivative warrant liability		$ 25,978
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer One [Member]
Product Information [Line Items]
Concentration Risk, Percentage			39.00%		33.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Two [Member]
Product Information [Line Items]
Concentration Risk, Percentage			13.00%		11.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | No Other Customer [Member]
Product Information [Line Items]
Concentration Risk, Percentage				10.00%		10.00%
Trade Name and Customer Relationships [Member]
Product Information [Line Items]
Intangible assets useful life					10 years
Trademarks [Member]
Product Information [Line Items]
Indefinite-lived intangible asset			$ 50,000		$ 50,000		$ 50,000

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Schedule of Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($)	Jun. 01, 2021	Jun. 30, 2021	Dec. 31, 2020
Business Acquisition [Line Items]
Goodwill		$ 11,988,050
Activ Nutritional, LLC [Member]
Business Acquisition [Line Items]
Purchase price, as adjusted, paid in cash	$ 26,044,570
Cash	8,468
Accounts receivable	1,799,695
Inventories	613,063
Prepaids	49,025
Accounts payable	(313,731)
Net tangible assets	2,156,520
Net identifiable intangible assets	11,900,000
Goodwill	11,988,050
Fair value of net assets acquired	26,044,570
Activ Nutritional, LLC [Member] | Trademarks [Member]
Business Acquisition [Line Items]
Net identifiable intangible assets	9,200,000
Activ Nutritional, LLC [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Net identifiable intangible assets	$ 2,700,000

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Schedule of Pro Forma Financial Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Business Combination and Asset Acquisition [Abstract]
Revenue	$ 3,016,094	$ 4,257,140	$ 6,989,810	$ 7,520,816
Net loss	$ (2,434,005)	$ (815,869)	$ (4,641,387)	$ (5,282,721)
Net loss per share-basic and diluted	$ (0.10)	$ (0.06)	$ (0.20)	$ (0.38)

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Acquisition of Activ Nutritional, LLC. (Details Narrative) - USD ($)		3 Months Ended		6 Months Ended
	Jun. 01, 2021	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Business Acquisition [Line Items]
Acquisition-related costs		$ 2,103,680		$ 2,103,680
Trade Name and Customer Relationships [Member]
Business Acquisition [Line Items]
Finite-Lived Intangible Asset, Useful Life				10 years
Activ Nutritional, LLC [Member]
Business Acquisition [Line Items]
Equity issued and outstanding	$ 26,000,000
Business combination revenue		1,049,803		$ 231,288
Acquisition-related costs		$ 2,104,000		2,104,000
Amortization				$ 11,900,000
Activ Nutritional, LLC [Member] | Trade Name and Customer Relationships [Member]
Business Acquisition [Line Items]
Finite-Lived Intangible Asset, Useful Life				10 years

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Schedule of Inventories (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Inventory Disclosure [Abstract]
Raw materials	$ 69,904	$ 218,307
Finished goods	886,355	166,665
Inventory, net	$ 956,259	$ 384,972

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Schedule of Property and Equipment (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 728,165	$ 727,023
Less accumulated depreciation and amortization	(482,454)	(441,347)
Property, plant and equipment, net	245,711	285,676
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	103,255	103,255
Testing Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	348,124	348,124
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	197,349	197,349
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	69,602	68,460
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 9,835	$ 9,835

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Property and Equipment, Net (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Property, Plant and Equipment [Abstract]
Depreciation and amortization	$ 41,107	$ 46,619

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Schedule of Intangible Assets (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Trade name	$ 9,200,000
Customer relationships	2,700,000
Trademark	50,000	50,000
Intangible assets, gross	11,950,000	50,000
Less accumulated amortization	(99,167)
Intangible assets, net	$ 11,850,833	$ 50,000

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Schedule of Finite-lived Intangible Assets Amortization Expense (Details)	Jun. 30, 2021 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2021 (remaining 6 months)	$ 595,000
2022	1,190,000
2023	1,190,000
2024	1,190,000
2025	1,190,000
Thereafter	6,445,833
Total future expected amortization expense	$ 11,800,833

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Intangible Assets, Net (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 99,167	$ 99,167	$ 99,167	$ 99,167
Trade Name and Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life			10 years
Activ Nutritional, LLC [Member] | Trade Name and Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life			10 years

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Schedule of Lease Liability (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Operating Leases
Remainder of 2021	$ 89,479
2022	182,249
2023	98,417
Total lease payments	370,145
Less: Imputed interest/present value discount	(15,018)
Present value of lease liabilities	355,127	$ 434,748
Less: Current portion	(168,700)	(162,845)
Operating lease liability - long term	$ 186,427	$ 271,903

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Operating Leases (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Operating Leases
Lease cost	$ 52,585	$ 30,488	$ 98,486	$ 74,069
Right-of-use assets	339,262		339,262		$ 418,590
Amortization of right of use asset	39,470		79,328	$ 76,327
Lease liabilities	$ 355,127		355,127		$ 434,748
Operating lease payments			$ 101,993
Weighted average remaining lease terms	2 years 14 days		2 years 14 days
Lease discount rate	3.90%		3.90%

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Payable to Former Officer (Details Narrative) - Chief Executive Officer [Member] - USD ($)		12 Months Ended
	Jun. 15, 2020	Dec. 31, 2020
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Former officers costs		$ 325,000
Settlement Agreement [Member] | Twelve Months [Member]
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Payments to former officers	$ 325,000

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Schedule of Fair Value Assumptions of Warrant Liability (Details) - Warrant Liability [Member	Dec. 31, 2020 USD ($) $ / shares shares
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Number of warrants | shares	10,417
Fair value of derivative warrant liability | $	$ 25,978
Measurement Input, Share Price [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Stock price | $ / shares	$ 2.49
Measurement Input, Risk Free Interest Rate [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Warrant liability, measurement input	0.17
Measurement Input, Price Volatility [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Warrant liability, measurement input	148
Measurement Input, Expected Term [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Warrant liability, measurement input, expected life (years)	3 years 9 months 18 days
Measurement Input, Expected Dividend Rate [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Warrant liability, measurement input	0

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Derivative Liability (Details Narrative) - USD ($)		3 Months Ended		6 Months Ended		12 Months Ended
	Jan. 02, 2021	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020	Apr. 09, 2019
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Aggregate fair value of the warrant derivative liability				$ 0		$ 25,978
Accumulated deficit		$ (61,266,876)		(61,266,876)		(54,083,328)
Increase decrease in derivative warrant liability			$ 2,856		$ (6,088)
Underwriters [Member]
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Accumulated deficit	$ 25,978
Increase decrease in derivative warrant liability	$ 25,978
Underwriters [Member] | IPO [Member]
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Warrants issued							10,417
Warrants price per share							$ 30.00
Aggregate fair value of the warrant derivative liability						$ 25,978

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Schedule of Warrants Activity (Details)	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Accumulated Other Comprehensive Income (Loss) [Line Items]
Shares, Ending Balance	485,067
Warrant [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Shares, Beginning Balance	2,132,758
Weighted Average Exercise Price, Beginning Balance | $ / shares	$ 2.48
Weighted Average Remaining Contractual Term (Years), Beginning Balance	3 years 9 months 21 days
Shares, Granted
Weighted Average Exercise Price, Granted | $ / shares
Shares, Forfeitures
Weighted Average Exercise Price, Forfeitures | $ / shares
Shares, Expirations
Weighted Average Exercise Price, Expirations | $ / shares
Shares, Exercised	(1,647,691)
Weighted Average Exercise Price, Exercised | $ / shares	$ 2.26
Shares, Ending Balance	485,067
Weighted Average Exercise Price, Ending Balance | $ / shares	$ 2.71
Weighted Average Remaining Contractual Term (Years), Ending Balance	3 years 3 months 21 days

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Schedule of Exercise Price of Warrants Outstanding and Exercisable (Details)	Jun. 30, 2021 $ / shares shares
Accumulated Other Comprehensive Income (Loss) [Line Items]
Warrants Outstanding and Exercisable (Shares)	485,067
Warrant One [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Warrants Outstanding and Exercisable (Shares)	160,108
Exercise Prices | $ / shares	$ 2.05
Warrant Two [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Warrants Outstanding and Exercisable (Shares)	146,667
Exercise Prices | $ / shares	$ 2.67
Warrant Three [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Warrants Outstanding and Exercisable (Shares)	112,001
Exercise Prices | $ / shares	$ 3.30
Warrant Four [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Warrants Outstanding and Exercisable (Shares)	37,700
Exercise Prices | $ / shares	$ 3.51
Warrant Five [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Warrants Outstanding and Exercisable (Shares)	18,174
Exercise Prices | $ / shares	$ 17.25
Warrant Six [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Warrants Outstanding and Exercisable (Shares)	10,417
Exercise Prices | $ / shares	$ 30.00

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Schedule of Share-based Compensation, Stock Options, Activity (Details)	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Equity [Abstract]
Shares Outstanding, Beginning Balance | shares	778,196
Weighted Average Exercise Price Outstanding, Beginning Balance | $ / shares	$ 9.32
Weighted Average Remaining Contractual Term (Years) Outstanding, Beginning Balance	6 years 4 months 17 days
Shares, Granted | shares	269,339
Weighted Average Exercise Price, Granted | $ / shares	$ 2.98
Weighted Average Remaining Contractual Term (Years), Granted	9 years 9 months 18 days
Shares, Forfeitures | shares	(69,445)
Weighted Average Exercise Price, Forfeitures | $ / shares	$ 26.40
Shares, Expirations | shares
Weighted Average Exercise Price, Expirations | $ / shares
Shares, Exercised | shares
Weighted Average Exercise Price, Exercised | $ / shares
Shares Outstanding, Ending Balance | shares	978,090
Weighted Average Exercise Price Outstanding, Ending Balance | $ / shares	$ 6.48
Weighted Average Remaining Contractual Term (Years) Outstanding, Ending Balance	7 years 2 months 12 days
Shares Exercisable, Ending Balance | shares	547,631
Weighted Average Exercise Price Exercisable, Ending Balance | $ / shares	$ 8.50
Weighted Average Remaining Contractual Term (Years) Exercisable, Ending Balance	5 years 4 months 24 days

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Schedule of Exercise Price of Options Outstanding and Exercisable (Details) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding (Shares)	978,090	778,196
Exercise Price One [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding (Shares)	41,667
Exercise Prices	$ 1.48
Exercise Price Two [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding (Shares)	50,000
Exercise Prices	$ 1.61
Exercise Price Three [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding (Shares)	66,668
Exercise Prices	$ 1.76
Exercise Price Four [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding (Shares)	5,001
Exercise Prices	$ 1.91
Exercise Price Five [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding (Shares)	41,667
Exercise Prices	$ 2.33
Exercise Price Six [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding (Shares)	1,667
Exercise Prices	$ 2.46
Exercise Price Seven [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding (Shares)	16,667
Exercise Prices	$ 3.25
Exercise Price Eight [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding (Shares)	152,671
Exercise Prices	$ 3.95
Exercise Price Nine [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding (Shares)	375,000
Exercise Prices	$ 6
Exercise Price Ten [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding (Shares)	104,167
Exercise Prices	$ 12
Exercise Price Eleven [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding (Shares)	10,415
Exercise Prices	$ 13.8
Exercise Price Twelve [Member]
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Options Outstanding (Shares)	112,500
Exercise Prices	$ 15

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Schedule of Non Vested Restricted Common Stock Activity (Details) - Restricted Common Stock [Member]	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares, Non-vested shares | shares	30,000
Fair value of shares, Non-vested shares | $ / shares	$ 1.41
Number of shares, Granted | shares	202,671
Fair value of shares, Granted | $ / shares	$ 3.95
Number of shares, Vested | shares	(22,500)
Fair value of shares, Vested | $ / shares	$ (1.41)
Number of shares, Non-vested shares | shares	210,171
Fair value of shares, Non-vested shares | $ / shares	$ 3.00

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Stockholders’ Equity (Details Narrative) - USD ($)						1 Months Ended	3 Months Ended		6 Months Ended
	Apr. 15, 2021	Feb. 10, 2021	Jan. 28, 2021	Jan. 15, 2021	Jan. 08, 2021	Jan. 31, 2021	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Subsidiary, Sale of Stock [Line Items]
Shares options, granted									269,339
Stock-compensation expense							$ 343,092	$ (1,335,441)	$ 730,707	$ (831,573)
Number of unvested options outstanding							472,131		472,131
Number of unvested options outstanding, value							$ 715,836		$ 715,836
Unvested options, amortized year									9 years 3 months 21 days
Aggregate intrinsic value of options outstanding							19,208		$ 19,208
General and Administrative Expense [Member]
Subsidiary, Sale of Stock [Line Items]
Stock-compensation expense									$ 389,224	$ (940,936)
Restricted Common Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Shares options, granted									50,000
Grant date fair value of options granted									$ 742,912
Stock-compensation expense									$ 365,295
Unvested options, amortized year									3 years 3 months 18 days
Shares options, granted									244,338
Unvested compensation							$ 1,035,796		$ 1,035,796
Warrants [Member] | Investors [Member]
Subsidiary, Sale of Stock [Line Items]
Number of warrants exercised									1,647,691
Number of common stock issued									1,647,691
Stock price							$ 2.26		$ 2.26
Net proceeds from warrants									$ 3,568,415
Common Stock [Member] | Chief Executive Officer [Member]
Subsidiary, Sale of Stock [Line Items]
Shares options, granted									269,339
Grant date fair value of options granted									$ 652,360
Expected life									6 years
Number of options vested									67,558
Option vesting period									one-year
Common Stock [Member] | Chief Executive Officer [Member] | Vested Over Two Years [Member]
Subsidiary, Sale of Stock [Line Items]
Number of options vested									135,113
Common Stock [Member] | Chief Executive Officer [Member] | Vested Over Three Years [Member]
Subsidiary, Sale of Stock [Line Items]
Number of options vested									66,668
Common Stock [Member] | Chief Executive Officer [Member] | Vested Over Four Years [Member]
Subsidiary, Sale of Stock [Line Items]
Number of options vested									16,333
Restricted Common Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Number of options vested	37,500					4,167
Restricted Common Stock [Member] | Chief Executive Officer [Member]
Subsidiary, Sale of Stock [Line Items]
Shares options, granted						152,671
Restricted Common Stock [Member] | Consultant [Member]
Subsidiary, Sale of Stock [Line Items]
Number of options vested						41,667
Maximum [Member] | Common Stock [Member] | Chief Executive Officer [Member]
Subsidiary, Sale of Stock [Line Items]
Volatility rate									119.00%
Discount rate									1.28%
Stock option, exercise price per share									$ 3.95
Minimum [Member] | Common Stock [Member] | Chief Executive Officer [Member]
Subsidiary, Sale of Stock [Line Items]
Volatility rate									117.00%
Discount rate									0.38%
Stock option, exercise price per share									$ 1.61
Sales Agreement [Member]
Subsidiary, Sale of Stock [Line Items]
Sale of stock, proceeds from transaction									$ 33,623,000
Issuance cost									$ 327,000
Sales Agreement [Member] | January 2021 1st ATM offering [Member ]
Subsidiary, Sale of Stock [Line Items]
Sale of Stock, Number of Shares Issued in Transaction				2,559,834
Sale of stock, proceeds from transaction				$ 9,700,000
Sales Agreement [Member] | January 2021 1st ATM offering [Member ] | Maximum [Member]
Subsidiary, Sale of Stock [Line Items]
Sale of Stock, Consideration Received Per Transaction					$ 10,000,000
Sales Agreement [Member] | January 2021 2nd ATM offering [Member]
Subsidiary, Sale of Stock [Line Items]
Sale of Stock, Number of Shares Issued in Transaction		5,048,840
Sale of stock, proceeds from transaction		$ 24,250,000
Sales Agreement [Member] | January 2021 2nd ATM offering [Member] | Maximum [Member]
Subsidiary, Sale of Stock [Line Items]
Sale of Stock, Consideration Received Per Transaction			$ 25,000,000

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Related Party Transactions (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Dr. David Evans [Member]
Entity Listings [Line Items]
Royalty percentage on sales			3.00%
Ceatus Media Group, LLC [Member]
Entity Listings [Line Items]
Services related digital marketing	$ 19,500	$ 13,750	$ 42,000	$ 27,500
DWT Evans LLC [Member]
Entity Listings [Line Items]
Building rent			$ 11,142	$ 10,708

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Schedule of Segment Reporting Information, by Segment (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Segment Reporting Information [Line Items]
Revenue	$ 1,223,720	$ 1,190,909	$ 1,457,017	$ 1,436,633
Cost of goods sold	665,219	644,579	798,255	753,688
Gross profit	558,501	546,330	658,762	682,945
Stock compensation expense	343,092	(1,335,441)	730,707	(831,573)
Operating expenses	4,755,963	2,589,997	7,138,134	4,558,965
Loss from operations	(4,540,554)	(708,226)	(7,210,079)	(3,044,447)
Cash	5,502,411		5,502,411		$ 8,518,732
Short-term investments	7,000,266		7,000,266
Inventories	956,259		956,259		384,972
Accounts receivable	1,884,782		1,884,782		11,248
Other	1,203,169		1,203,169		191,179
Total current assets	16,546,887		16,546,887		9,094,883
Right of use asset	339,262		339,262		418,590
Property and equipment, net	245,711		245,711		285,676
Intangible assets, net	11,850,833		11,850,833		50,000
Goodwill	11,988,050		11,988,050
Other	314,082		314,082		11,751
Total assets	41,284,825		41,284,825		9,860,900
Clinical Nutrition [Member]
Segment Reporting Information [Line Items]
Revenue	1,171,445	1,152,894	1,333,588	1,304,028
Cost of goods sold	639,188	628,205	724,105	695,291
Gross profit	532,257	524,689	609,483	608,737
Stock compensation expense
Operating expenses	1,938,799	1,072,508	3,114,926	3,344,411
Loss from operations	(1,406,542)	(547,819)	(2,505,443)	(2,735,674)
Cash
Short-term investments
Inventories	835,643		835,643		254,879
Accounts receivable	1,857,952		1,857,952
Other	1,072,918		1,072,918		89,333
Total current assets	3,766,513		3,766,513		344,212
Right of use asset	304,961		304,961		374,447
Property and equipment, net	113,945		113,945		135,641
Intangible assets, net	11,850,833		11,850,833		50,000
Goodwill	11,988,050		11,988,050
Other	314,082		314,082		11,751
Total assets	28,338,384		28,338,384		916,051
Diagnostics Equipment [Member]
Segment Reporting Information [Line Items]
Revenue	52,275	35,315	123,429	126,505
Cost of goods sold	26,031	15,278	74,150	55,920
Gross profit	26,244	20,037	49,279	70,585
Stock compensation expense
Operating expenses	57,845	93,620	113,310	210,070
Loss from operations	(31,601)	(73,583)	(64,031)	(139,485)
Cash
Short-term investments
Inventories	120,616		120,616		130,093
Accounts receivable	26,830		26,830
Other	130,251		130,251		101,846
Total current assets	277,697		277,697		231,939
Right of use asset	34,301		34,301		44,143
Property and equipment, net	131,766		131,766		150,035
Intangible assets, net
Goodwill
Other
Total assets	443,764		443,764		426,117
Corporate Segment [Member]
Segment Reporting Information [Line Items]
Revenue		2,700		6,100
Cost of goods sold		1,096		2,477
Gross profit		1,604		3,623
Stock compensation expense	343,092	(1,335,441)	730,707	(831,573)
Operating expenses	2,759,319	1,423,869	3,909,898	1,004,484
Loss from operations	(3,102,411)	$ (86,824)	(4,640,605)	$ (169,288)
Cash	5,502,411		5,502,411		8,518,732
Short-term investments	7,000,266		7,000,266
Inventories
Accounts receivable
Other
Total current assets	12,502,677		12,502,677		8,518,732
Right of use asset
Property and equipment, net
Intangible assets, net
Goodwill
Other
Total assets	$ 12,502,677		$ 12,502,677		$ 8,518,732

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Segment Reporting (Details Narrative)	6 Months Ended
	Jun. 30, 2021 Segment
Segment Reporting [Abstract]
Number of reportable segments	2

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Commitments and Contingencies (Details Narrative) - Mr. Scholte's [Member] - Employment Agreement [Member]	Jan. 06, 2021 USD ($)
Loss Contingencies [Line Items]
Officers compensation	$ 400,000
Deferred Compensation Arrangement with Individual, Description	Mr. Scholtes shall be granted (i) stock options equal to 2% of the Company’s issued and outstanding shares of common stock on the date of grant if the Company achieves certain specified performance objectives established by the Board of Directors for the Company’s fiscal years ending December 31, 2021, and December 31, 2022, and (ii) additional stock options equal to either 2% or 3% of the Company’s issued and outstanding shares of common stock on the date of grant if the Company meets certain financial objectives during the first five years following January 6, 2021. If Mr. Scholtes’ employment is terminated by the Company without cause, as defined under his employment agreement, if the term expires after a notice of non-renewal is delivered by the Company, or if Mr. Scholtes’ employment is terminated following a change of control, as defined, Mr. Scholtes will be entitled to (a) twelve months’ base salary, (b) the prorated portion of the any bonus, based on actual performance, and (c) base salary and benefits accrued through the date of termination.
Minimum [Member]
Loss Contingencies [Line Items]
Employee benefit	$ 400,000