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

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

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

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.x [X] Yes ¨[ ] No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files).x [X] 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.

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 x[X] No

As of ~~August 10, 2018,~~May 3, 2019, there were ~~40,329,475~~22,491,264 shares of the ~~Registrant’s~~Company’s common stock, par value $0.001 per share, issued and outstanding. ~~Registrant’s~~The Company’s common stock ~~is not publicly traded.~~ began trading on the NASDAQ Capital Market on April 5, 2019, under the symbol “GHSI.”

On January 30, 2019, the Company filed a Certificate of Amendment to its Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effectuate a one-for-two (1:2) reverse stock split (the “Reverse Stock Split”) of its common stock without any change to its par value. Proportional adjustments for the Reverse Stock Split were made to the Company’s outstanding common stock, stock options, and warrants as if the split occurred at the beginning of the earliest period presented in this Quarterly Report on Form 10-Q.

Throughout this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “our company,” “Guardion,” the “Company” and the “Registrant” refer to Guardion Health Sciences, Inc.

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or future predictions, including events or predictions relating to the Company’s future financial performance, and are based on current expectations, estimates, forecasts and projections about the Company, its future performance, its beliefs and management’s assumptions. They are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “feel,” “confident,” “estimate,” “intend,” “predict,” “forecast,” “potential” or “continue” or the negative of such terms or other variations on these words or comparable terminology. These statements involve unknown risks and uncertainties that may individually or materially impact the matters discussed herein for a variety of reasons that are outside the control of the Company, including, but not limited to, the Company’s ability to raise sufficient financing to implement its business plan and its ability to successfully develop and commercialize its proprietary products and technologies. Readers are cautioned not to place undue reliance on these forward-looking statements, as actual results could differ materially from those described in the forward-looking statements contained herein. 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, ~~2017~~2018 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). The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, in each case, except to the extent required by applicable law.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. The Company will not update or revise the forward-looking statements except to the extent required by applicable law.

Guardion Health Sciences, Inc. (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, changing its name from Guardion Health Sciences, LLC to Guardion Health Sciences, Inc.

The Company is a specialty health sciences company that develops, formulates and distributes condition-specific medical foods with an initial medical food product on the market under the brand name Lumega-Z^® that replenishes and restores the macular protective pigment.

The Company also developed a proprietary medical device called the MapcatSF^®that accurately measures the macular pigment optical density.

On September 29, 2017, the Company, through its wholly owned subsidiary VectorVision Ocular Health, Inc. (“VectorVision”), completed its acquisition of substantially all of the assets and certain liabilities of VectorVision, Inc. (an Ohio corporation), a company that ~~specializes~~specialized in the standardization of contrast sensitivity, glare sensitivity, low contrast acuity, and ~~ETDRS~~early treatment diabetic retinopathy study (“ETDRS”) visual acuity testing. VectorVision develops, manufactures and sells equipment and supplies for standardized vision testing. The acquisition expands the Company’s technical portfolio. CSV-1000 and CSV-3000 instruments offer auto-calibrated tests to ensure correct testing luminance and contrast levels for consistent, highly accurate and repeatable results. Recently issued patents the Company received for continuously calibrating the light source will be incorporated into the new CSV-2000, in which the proprietary standardized contrast sensitivity test patterns can be presented to the patient using a computer monitor as opposed to the current calibrated backlit system.

In August 2018, the Company created a wholly owned subsidiary, Transcranial Doppler Solutions, Inc. (“TDSI”). TDSI is dedicated to the pursuit of early predictors resulting in, the Company believes, valuable therapeutic intervention for practitioners and their patients, and additional revenue streams generated from the testing and sale of Company products to appropriate customers. The Company has established operations with selected clinics and is focusing on expanding its client base.

In November 2018, the Company launched a new medical food product, GlaucoCetin^TM, which the Company believes is the first vision-specific medical food designed to support and protect the mitochondrial function of optic nerve cells and improve blood flow in the ophthalmic artery in patients with glaucoma.

On April 9, 2019, the Company closed its initial public offering (the “IPO”) of 1,250,000 shares of common stock, par value $0.001 per share, at an IPO price to the public of $4.00 per share.The shares began trading on the NASDAQ Capital Market on April 5, 2019 under the symbol “GHSI.”

The Company has had limited operations to date and has been primarily engaged in research and development, product commercialization and capital raising activities.

The financial statements have been prepared assuming the Company will continue as a going concern. The Company had a net loss of ~~$4,143,025~~$1,385,099 and utilized cash in operating activities of ~~$2,424,058~~$586,085 during the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. The Company expects to continue to incur net losses and negative operating cash flows in the near-term. As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the consolidated financial statements are issued.

The Company’s independent registered public accounting firm has also included explanatory language in their opinion accompanying the Company’s audited financial statements for the year ended December 31, ~~2017.~~2018. The ~~Company’s~~ financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

The Company will continue to incur significant expenses for ~~continued~~ commercialization activities related to ~~Lumega-Z,~~its medical foods, the MapcatSF^® medical device, VectorVision diagnostic equipment, the TDSI business and ~~VectorVision products.~~with respect to efforts to continue to build the Company’s infrastructure. Development and commercialization of medical foods and medical devices 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.~~other than Lumega-Z and the MapcatSF. Subsequent to March 31, 2019, the Company completed the IPO, resulting in net cash proceeds of $3,945,000 to the Company. The Company is ~~continuing to attempt~~seeking to raise additional debt and/or equity capital to fund future operations, 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. 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.

Reverse Stock Split

On January 30, 2019, following stockholder and Board approval, the Company filed a Certificate of Amendment to its Amended Certificate of Incorporation, as amended (the “Amendment”), with the Secretary of State of the State of Delaware to effectuate a one-for-two (1:2) reverse stock split (the “Reverse Stock Split”) of its common stock, par value $0.001 per share, without any change to its par value. The Amendment became effective on the filing date. The number of shares authorized for common and preferred 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. Proportional adjustments for the Reverse Stock Split were made to all share and per share amounts as if the split occurred at the beginning of the earliest period presented.

The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in ~~conformity~~accordance with accounting principles generally accepted in the United States ~~of America~~ (“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 such rules and regulations. 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 year ended December 31, 2018 filed with the SEC. The condensed consolidated balance sheet as of December 31, 2018 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, 2019.

Certain prior period amounts have been reclassified to conform to current period presentation. Such amounts consist of operating segment disclosures, whereby revenue and cost of goods sold have been broken out on the Consolidated Statements of Operations to conform with the Company’s two reportable business segments as of March 31, 2019.

The preparation of the 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.

These estimates and assumptions include estimates for reserves of uncollectible accounts, inventory obsolescence, depreciable lives of property and equipment, analysis of impairments of recorded long-term tangible and intangible assets, realization of deferred tax assets, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services.

In connection with the VectorVision transaction, the Company identified and allocated estimated fair values to intangible assets including goodwill and customer relationships.

In accordance with Accounting Standard Codification (“ASC”) 350 – Intangibles – Goodwill and Other, the Company determined whether these assets are expected to have indefinite (such as goodwill) or limited useful lives, and for those with limited lives, the Company established an amortization period and method of amortization. Its goodwill and other intangible assets are subject to periodic impairment testing.

The Company utilized the services of an independent third-party valuation firm to assist in identifying intangible assets and in estimating their fair values. The useful lives for the Company’s intangible assets other than goodwill were estimated based on Management’s consideration of various factors, including assumptions that market participants might use about sales expectations as well as potential effects of obsolescence, competition, technological progress and the regulatory environment. Because the future pattern in which the economic benefits of these intangible assets may not be reliably determined, amortization expense is generally calculated on a straight-line basis.

Amortization expense for the identifiable intangible assets associated with the VectorVision acquisition is approximately $54,000 per quarter and is included with general and administrative expenses in the Company’s Statements of Operations.

The Company reviews long-lived assets, including property and equipment, identifiable intangible assets, and goodwill for impairment at each fiscal year end or when events or changes in circumstances indicate the carrying value of these assets may exceed their current fair values. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the assets. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell and are no longer depreciated. The Company has not historically recorded any impairment to its long-lived assets. In the future, if events or market conditions affect the estimated fair value to the extent that a long-lived asset is impaired, the Company will adjust the carrying value of these long-lived assets in the period in which the impairment occurs. As of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the Company had not deemed any long-lived assets as impaired and was not aware of the existence of any indicators of impairment at such dates.

~~The Company operates~~Deferred offering costs consist principally of legal, accounting, and ~~manages its business as one reporting and operating segment, which is~~underwriters’ fees incurred related to the ~~business of developing and commercializing a variety of products that support~~IPO. These deferred offering costs will be charged against the ~~detection, intervention and monitoring of a range of eye diseases. The Company’s chief executive officer, who is~~gross proceeds received during the ~~chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance.~~appropriate period.

The Company’s revenue is comprised of sales of medical foods and dietary supplements to consumers through a direct sales/credit card process. In addition, the Company sells medical device equipment and supplies to customers both in the U.S. and internationally.

~~In September 2014,~~On January 1, 2018. the ~~Financial Accounting Standards Board issued Accounting Standards Update No.~~Company adopted ASU 2014-09, ~~(ASU No. 2014-09) regarding revenue recognition.~~Revenue from Contracts with Customers (Topic 606)(“ASU 2014-09” or “Topic 606”) and all related amendments and applied the concepts to all contracts using the full retrospective method. The new standard provides authoritative guidance clarifying the principles for recognizing revenue and developing a common revenue standard for U.S. generally accepted accounting principles. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in the exchange for those goods or services. ~~The ASU became effective January 1, 2018.~~

Due to the nature of the products sold by the Company, the adoption of the new standard has had no quantitative effect on the financial statements. However, the guidance requires additional disclosures to help readers of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized.

The Company previously recognized revenue when risk of loss transferred to its customers and collection of the receivable was reasonably assured, which generally occurs when the product is shipped. A product is not shipped without an order from the customer and credit acceptance procedures performed. The Company allows for returns within 30 days of purchase, although for all periods presented, returns have been insignificant.

Under the new guidance, revenue is recognized when control of promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods 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. Revenue and costs of sales are recognized once products are delivered to the customer’s control and performance obligations are satisfied.

All products sold by the Company are distinct individual products and consist of medical foods, supplemental formulas, medical devices and related supplies. The products 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.

Control of products sold transfers to customers upon shipment from the Company’s facilities, and the Company’s performance obligations are satisfied at that 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. Payment for sales of Lumega-Z is generally made by approved credit cards. Payments for medical device sales are generally made by check, credit card, or wire transfer. Historically the Company has not experienced any significant payment delays from customers.

The Company provides a 30-day right of return to its retail Lumega-Z customers. 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 Lumega-Z and VectorVision product returns, the Company determined that less than one percent of products is returned, and therefore believes 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.

The following table presents the Company’s revenues disaggregated by ~~product type:~~segment:

Research and development costs consist primarily of fees paid to consultants and outside service providers, patent fees and costs, and other expenses relating to the acquisition, design, development and testing of the Company’s medical foods and related products. Research and development expenditures, which include stock compensation expense, are expensed as incurred and totaled ~~$194,708~~$29,028 and ~~$25,770~~$159,588 for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively.

The Company is the owner of three issued domestic patents, two pending domestic patent applications, one issued foreign patent in Europe, and three foreign patent applications in Canada, Europe and Hong Kong. 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 three months ended March 31, 2019 and 2018, patent costs were $26,025 and $12,474, respectively, and are included in general and administrative costs in the statements of operations.

Prior to January 1, 2019, the Company accounted for leases under Accounting Standards Codification (ASC) 840, Accounting for Leases. Effective from January 1, 2019, the Company adopted the guidance of ASU 2016-02 (ASC 842), Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods. The adoption of ASC 842 on January 1, 2019 resulted in the recognition of operating lease right-of-use assets of $626,667, lease liabilities for operating leases of $635,131, and a zero cumulative-effect adjustment to accumulated deficit. See Note 8 for further information regarding the impact of the adoption of ASC 842 on the Company’s financial statements.

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.

Stock-based payments to officers, directors, ~~consultants, contractors,~~ and employees, which include grants of employee stock options, are recognized in the financial statements based on their fair ~~values.~~values in accordance with Topic 718. Stock option grants, which are generally time vested, will be measured at the grant date fair value and charged to operations on a straight-line basis over the vesting period. The fair value of stock options is determined utilizing the Black-Scholes option-pricing model, which is affected by several variables, including the risk-free interest rate, the expected dividend yield, the expected life of the equity award, the exercise price of the stock option as compared to the fair market value of the common stock on the grant date and the estimated volatility of the common stock over the term of the equity award.

~~The~~In prior periods, the Company ~~accounts~~accounted for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereby the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. ~~Non-employee stock-based compensation charges generally are amortized over~~On January 1, 2019, the ~~vesting period using a graded vesting basis. In certain circumstances where there are no future performance requirements by~~Company adopted Accounting Standards Update (ASU) 2018-07 which expands the ~~non-employee, grants are immediately vested~~scope of Topic 718 to include share-based payment transactions for acquiring goods and ~~the total stock-based compensation charge is recorded in the period of the measurement date.~~

The Company recognizes stock compensation expense, on stock purchases at a price less than fair value, and for fully-vested stock issued to consultants and other service providers, for the excess of fair value of the stock over the price paid for the stock.services from nonemployees. The Company recognizes the fair value of stock-based compensation within its statements of operations with classification depending on the nature of the services rendered. The ~~Company will issue~~adoption of the new ~~shares to satisfy stock option exercises.~~standard had no cumulative effect on previously reported amounts.

The Company’s computation of basic and diluted net loss per common share is measured as net loss divided by the weighted average common shares outstanding during the respective periods, excluding unvested restricted common ~~stock, if applicable.~~stock. Shares of restricted stock are included in the basic weighted average number of common shares outstanding from the time they vest. Potential common shares such as from unexercised warrants, options, and shares ~~of common stock issuable upon conversion of~~associated with convertible debt ~~and convertible preferred stock~~ outstanding that have an anti-dilutive effect are excluded from the calculation of diluted net loss per share. The Company’s basic and diluted net loss per share is the same for all periods presented because all shares ~~of common stock~~ issuable upon exercise of warrants ~~options,~~ and conversion of convertible debt ~~and convertible preferred stock~~ outstanding are anti-dilutive as they decrease loss per share.

The following table sets forth the number of shares excluded from the computation of diluted loss per share, as their inclusion would have been anti-dilutive:

The Company’s management does not believe that there are any recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.

The Company determined its reporting units in accordance with ASC 280, “Segment Reporting” (“ASC 280”). The Company historically has reported its operating results as a single reportable segment described as the business of developing and commercializing a variety of products that support the detection, intervention and monitoring of a range of eye diseases. The Company’s chief executive officer, who is the Chief Operating Decision Maker (“CODM”), has historically reviewed financial information on an aggregated basis for purposes of allocating resources and evaluating financial performance.

In September 2017, the Company, through its wholly-owned subsidiary VectorVision Ocular Health, Inc., acquired substantially all of the assets and certain liabilities of VectorVision, Inc., a company that specialized in the standardization of contrast sensitivity, glare sensitivity, low contrast acuity, and early treatment diabetic retinopathy study (“ETDRS”) visual acuity testing. In August 2018, the Company created a wholly owned subsidiary, Transcranial Doppler Solutions, Inc. (“TDSI”). The Company has established TDSI operations with selected clinics and is focusing on expanding its client base.

Although all of the Company’s products and services target the early detection, intervention and monitoring of a range of eye diseases, the addition of potential new products or services as the Company grows requires management to periodically reevaluate its reporting structure. As sales of our medical food as well as sales of VectorVision products grow, there is an increased need for the CODM to evaluate revenue and gross profit on a product line or group basis for purposes of resource allocation. As of March 31, 2019, the TDSI subsidiary does not meet the required quantitative criteria to be considered a reportable operating segment. Additionally, TDSI does not share similar economic characteristics or a majority of the aggregation criteria set forth in ASC 280, and therefore is included in “Corporate” below. As of December 31, 2018, based on anticipated growth and the expanding diversity of product and service offerings by the Company, Management has concluded that results should be reported in two operating segments: Medical Foods and Vision Testing Diagnostics. The following tables set forth our results of operations by segment (expenses allocated to Corporate consist of non-cash stock compensation expense, depreciation and amortization, and corporate legal fees):

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

For the three months ended March 31, 2019 and 2018, depreciation and amortization expense was $14,444 and $19,363, respectively, of which $0 and $7,325 was included in research and development expense, $9,108 and $1,500 was included in sales and marketing expense, and $5,335 and $10,333 was included in general and administrative expense, respectively.

The Company’s intangible assets, including finite-lived intangible assets and $50,000 of non-amortizable purchased intellectual property, consisted of the following:

The Company’s amortization expense on its finite-lived intangible assets was $53,659 and $53,659 for the three months ended March 31, 2019 and 2018, respectively.

The Company estimates future amortization expense on its finite-lived intangible assets as of March 31, 2019 to be as follows:

On March 12, 2019, the Company issued a promissory note with principal in the amount of $100,000, simple interest of 10% annually, and with a maturity date of June 10, 2019.

On March 15, 2019, the Company issued a convertible note with principal in the amount of $100,000, simple interest of 5% annually, and with a maturity date of September 30, 2019. In addition, on March 20, 2019, the Company issued a convertible note with principal in the amount of $150,000, simple interest of 5% annually, and with a maturity date of September 30, 2019. As of March 31, 2019, convertible notes with a principal balance of $250,000 and accrued interest of $479 were outstanding.

The convertible notes (principal and accrued interest) were mandatorily convertible upon the consummation of the IPO. Concurrent with the issuance of the notes, the Company issued warrants to both note holders equal to the number of shares of common stock that the holders receive in connection with the converted notes. The per share exercise price of the warrants was set at 125% of the conversion price of the notes, defined in the note agreements, as the lower of (a) 75% of the price per share of common stock of the IPO or (b) $2.30.

Due to the variable terms of both the exercise price and the number of warrants to be issued, the warrants were accounted for as derivative liabilities at March 31, 2019. The aggregate fair value of the warrants was calculated as $436,034 based on a probability effected Black-Scholes option pricing model with a stock price of $4.00, volatility of 138%, and risk-free rates ranging from 2.34% - 2.39%. At March 31, 2019, the Company estimated that the issuance of 109,038 warrants with an exercise price of $2.88 per share would correspond to the number of shares of common stock that the holders would receive in connection with the completion of the IPO (the IPO was completed on April 9, 2019). The Company recognized a debt discount of $250,000 equal to the face amount of the convertible notes and recorded a financing cost equal to the difference between the fair value of the warrants and the debt discount. The financing cost of $186,034 is shown as fair value of warrants on the accompanying statement of operations for the three months ended March 31, 2019.

The company recorded amortization expense related to the debt discount of $16,545 during the three months ended March 31, 2019. As of March 31, 2019, the unamortized debt discount was $233,455.

In October 2012, the Company entered into a lease agreement for 9,605 square feet of office and warehouse space commencing March 1, 2013. Upon entering into the agreement, the Company paid a deposit of $47,449, of which $36,979 represented prepaid rent. As of March 31, 2019, $10,470 remained on deposit under the lease agreement. The lease (“Lease 1”) was renewed for an additional five years in 2018. As of March 31, 2019, remaining average monthly lease payments under the amended lease agreement were $12,863 through July 2023.

In connection with the VectorVision acquisition on September 29, 2017, the Company assumed a lease agreement for 5,000 square feet of office and warehouse space which commenced on October 1, 2017. The lease (“Lease 2”) was renewed for an additional 65 months. As of March 31, 2019, remaining average monthly lease payments are $1,832 through February ~~2016,~~2023.

In accounting for the ~~FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842).~~leases, the Company adopted ASU 2016-02 - Leases, which requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease initially measured at the present value of the lease payments. The Company classified the leases as operating leases and determined that the fair value of Lease 1 at the inception of the lease was $625,778 using a discount rate of 8.0%. the fair value of Lease 2 at the inception of the lease was $100,742 using a discount rate of 8%. During the three months ended March 31, 2019, the Company made combined payments on both leases of $41,166 towards the ~~balance sheet~~lease liabilities. As of March 31, 2019 and December 31, 2018, the lease liability for ~~all leases with terms longer than 12 months, as well as~~Lease 1 was $561,623 and $586,082, respectively, and the ~~disclosure of key information about leasing arrangements.~~lease liability for Lease 2 was $73,508 and $77,137, respectively. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. ~~ASU 2016-02 requires classification~~Combined rent expense for both leases for the three months ended March 31, 2019 and 2018 was $43,581 and $5,336, respectively. During the three months ended March 31, 2019 and 2018, the Company reflected amortization of ~~all cash payments within operating activities in the statement~~right of ~~cash flows. Disclosures are required to provide the amount, timing~~use asset of $30,502 and uncertainty of cash flows arising from leases. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company has not yet evaluated the impact of the adoption of ASU 2016-02 on the Company’s financial statement presentation or disclosures.

In July 2017, the FASB issued Accounting Standards Update No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed$3,543 related to the ~~entity’s own stock. As~~leases, respectively, resulting in a ~~result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for~~net asset balance of $626,667 as ~~derivative liabilities. A company will recognize the value~~ of a down round feature only when it is triggered and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017-11 is to be applied using a full or modified retrospective approach. The adoption of ASU 2017-11 is not currently expected to have any impact on the Company’s financial statement presentation or disclosures.

In June 2018, the FASB issued Accounting Standards Update 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Revenue from Contracts with Customers (Topic 606). ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company will adopt the provisions of ASU 2018-07 in the quarter beginning January 1,March 31, 2019. ~~The adoption of ASU 2018-07 is not expected to have any impact on the Company’s financial statement presentation or disclosures.~~

The Company’s management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.

On September 29, 2017, the Company, through a wholly-owned subsidiary, completed the acquisition of substantially all of the assets and certain liabilities of VectorVision, Inc., an Ohio corporation (“VectorVision”), in exchange for 3,050,000 shares of the Company’s common stock, valued at $2,287,500, pursuant to the terms of an Asset Purchase and Reorganization Agreement dated September 29, 2017 (the “VectorVision Agreement”). The VectorVision Agreement was entered into on an arm’s-length basis. The wholly-owned subsidiary that acquired the business is called VectorVision Ocular Health, Inc., a Delaware corporation, doing business as VectorVision. With respect to the 3,050,000 shares of common stock, 250,000 shares are held back by the Company through November 28, 2019 as security for VectorVision’s indemnification obligations to the Company and the remaining 2,800,000 shares were issued to VectorVision at the closing of the transaction. Per the VectorVision Agreement, the 2,800,000 shares were subsequently distributed to the two VectorVision shareholders in proportion to their shareholdings in VectorVision. The shares represented approximately 11% of the Company’s issued and outstanding common stock immediately following consummation of the transaction. The shares held back as security are included in the Company’s weighted average common shares outstanding for per-share calculations.

VectorVision develops, manufactures and sells equipment and supplies for standardized vision testing for use by eye doctors in clinical trials, for real-world vision evaluation, and industrial vision testing. VectorVision specializes in the standardization of contrast sensitivity, glare sensitivity, low contrast acuity, and ETDRS (Early Treatment Diabetic Retinopathy Study) visual acuity testing. VectorVision developed and commercialized its CSV-1000 medical device to conduct contrast sensitivity testing and it developed and commercialized its ESV-3000 medical device to conduct ETDRS visual acuity testing. The patented standardization system provides the practitioner or researcher with the ability to delineate very small changes in visual capability, either as compared to the population or from visit to visit. The Company believes VectorVision’s CSV-1000 device to be the standard of care for clinical trials. The VectorVision transaction expanded the Company’s technical portfolio and the Company believes it further established the Company’s position at the forefront of early detection, intervention and monitoring of a range of eye diseases.

In accordance with ASC 805, the Company utilized the acquisition method of accounting, whereby the purchase consideration is allocated to specific tangible and intangible assets at their estimated fair values on the date of acquisition. The following table summarizes the allocation of preliminary fair values of the purchase consideration to the assets and liabilities assumed:

~~Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected revenue and benefits of the combined company.~~

The following unaudited pro forma financial information gives effect to the Company’s acquisition of VectorVision as if the acquisition had occurred on January 1, 2017 and had been included in the Company’s consolidated statements of operations during the three and six-month periods ended June 30, 2017:

For the six months ended June 30, 2018 and 2017, depreciation expense was $41,242 and $31,331, respectively, of which $15,376 and $14,650 were included in research and development expense, $4,138 and $0 were included in sales and marketing expense, and $21,728 and $16,861 were included in general and administrative expense, respectively.

On January 26, 2018, the Company acquired the rights to the trademark GLAUCO-HEALTH as well as the name “International Eye Wellness Institute” (together, the “IP Assets”) from an unrelated third party. The purchase included all rights, title, and interest in and to the IP Assets, including (a) the right to register and use the IP Assets; (b) all goodwill associated with the IP Assets; (c) all income, royalties, and damages hereafter due or payable with respect to the IP Assets; (d) all rights to sue for past, present, and future infringements or misappropriations of the IP Assets; and (e) and all other intellectual property rights owned or claimed by the seller or embodied in the IP Assets. In exchange for these rights, the Company paid the seller $50,000 in cash.

ASC 350-30-20 defines a defensive intangible asset as an acquired intangible asset in a situation in which an entity does not intend to actively use the asset but intends to hold (lock up) the asset to prevent others from obtaining access to the asset. The Company determined that the acquired intangible asset met the definition of a defensive intangible asset. The Company accounted for the $50,000 payment as an acquired intangible asset as of the closing of the agreement. As the Company can renew the underlying rights to the IP Assets indefinitely at nominal cost, the assets have been classified as a non-amortizable intangible asset on the Company’s balance sheet at June 30, 2018. The Company will evaluate the status of the assets for impairment annually or more frequently if warranted.

On January 26, 2018 the Company entered into a consulting agreement with the principal of the seller to assist with the development of the IP Assets and other assets acquired by the Company in the transaction. In conjunction with the consulting agreement, the Company granted a stock option on January 26, 2018 to the consultant to purchase a total of 500,000 shares of the common stock of the Company (see Note 8).

Due to and from related parties represents unreimbursed expenses and compensation incurred on behalf of, and amounts loaned to the Company by, Michael Favish, the Company’s Chief Executive Officer, as well as other stockholders. The advances are unsecured, non-interest bearing and are due on demand. As of June 30, 2018 and December 31, 2017, the Company had $117,473 and $146,133, respectively, due to related parties.

During 2016, the Company sold 1,170,000 shares of the Company's Series A Senior Convertible Preferred Stock (the "Series A Preferred Stock") to various investors. The purchase price of the Series A Preferred Stock was $1.00 per share, for an aggregate purchase price of $1,170,000. In addition, during 2016, the Company issued 535,154 shares of its Series A Preferred Stock with a fair value of $784,888 upon conversion of $535,149 of notes payable and accrued interest. The Series A Preferred Stock had a stated value of $1.00 per share and accrued an annual dividend at the rate of 8% of the stated value, calculated quarterly, paid in shares of common stock at the rate of $0.60 per share.

During the six months ended June 30, 2017, the Company declared dividends of $67,646 on its Series A Preferred Stock which were satisfied in full through the issuance of an aggregate of 112,759 shares of common stock.

Beginning in March 2017 and through September 30, 2017, the Company sold 3,105,000 shares of the Company's Series B Convertible Preferred Stock (the "Series B Preferred Stock") to various investors. The purchase price of the Series B Preferred Stock was $1.00 per share, for an aggregate purchase price of $3,105,000. The Series B Preferred Stock had a stated value of $1.00 per share and accrued an annual dividend at the rate of 6% of the stated value, calculated quarterly, paid in shares of common stock at the rate of $0.75 per share.

During the six months ended June 30, 2017, the Company declared dividends of $13,537 on its Series B Preferred Stock which were satisfied in full through the issuance of an aggregate of 18,054 shares of common stock.

On November 3, 2017, the Company completed the issuance and sale of an aggregate of 4,347,827 shares of common stock (see below). The completion of the private placement triggered, at the Company's election, the automatic conversion of the Series A Preferred Stock and the Series B Preferred Stock into shares of common stock. Accordingly, immediately following the completion of the private placement, the Company effected the conversion of all outstanding shares of Series A Preferred Stock and the Series B Preferred Stock into 6,981,938 shares of common stock (excluding accrued but unpaid dividends) effective November 3, 2017. On April 26, 2018, the Company filed a Certificate of Elimination with the Secretary of the State of Delaware, withdrawing the respective Certificates of Designation that established the right, privileges and preferences of the Series A Preferred Stock and Series B Preferred Stock, thereby making all 10,000,000 authorized shares of preferred stock available for issuance.

On November 3, 2017, the Company completed the issuance and sale of an aggregate of 4,347,827 shares of common stock, par value $0.001 per share, at a purchase price of $1.15 per share. Total gross proceeds were $5,000,001. These shares were sold in a private placement to certain purchasers pursuant to a Stock Purchase Agreement dated as of November 3, 2017. Pursuant to the agreement, the purchasers have customary preemptive rights to participate in future equity and equity-linked issuances by the Company up to the extent necessary to maintain such purchaser’s pro rata ownership percentage in the Company’s securities, subject to customary exceptions. The preemptive rights terminate at the earlier of (i) May 3, 2019, (ii) such time as the Purchasers hold less than five percent (5%) of the issued and outstanding shares of the Company’s common stock, or (iii) such time as the shares of common stock of the Company shall become listed or approved for listing on a national securities exchange.

In January 2018, an investor exercised warrants for 146,000 shares of common stock. The warrants were exercisable for $0.01 per share, and the Company received $1,460 in cash. The Company issued the shares and recorded the cash received as additional equity.

On April 30, 2018, The Company offered a one-month exercise period extension to stockholders who held warrants to purchase shares of common stock of the Company that were scheduled to expire on May 1, 2018. Pursuant to the terms of a Note and Warrant Purchase Agreement entered into by the Company and such holders, such warrants were issued upon the conversion of certain promissory notes into common stock on May 1, 2015. Four of the warrant holders did not extend their warrants, resulting in the expiration of 151,006 warrants on May 1, 2018. Six warrant holders elected to extend the term of an aggregate of 403,085 warrants by one month to June 1, 2018. The exercise price of such warrants is $1.00 per share.

On May 31, 2018, the six warrant holders noted above were offered a further extension of the exercise period for their warrants. One holder did not extend, resulting in the expiration of 30,237 warrants on June 1, 2018. Five warrant holders elected to extend the term of an aggregate of 372,848 warrants. These warrants are now scheduled to expire on the earlier of (a) May 31, 2019 or (b) sixty days following the date on which the common stock of the Company becomes listed or approved for listing on a national securities exchange. The exercise price of such warrants remains unchanged at $1.00 per share, but cashless exercise provisions have been eliminated from such warrants.

Management applied the guidance in ASC 718 – Compensation-Stock Compensation which indicates that a modification to the terms of an award should be treated as an exchange of the original award for a new award with the resulting total compensation cost equal to the grant-date fair value of the original award plus the incremental value of the modification to the award. Under ASC 718, the calculation of the incremental value is based on the excess of the fair value of the new (modified) award based on current circumstances over the fair value of the original award measured immediately before its terms are modified based on current circumstances. The Company recognized expense of $494,391 relating to the extension of the exercise period of the warrants based upon a Black-Scholes option-pricing model using a stock price of $1.15, volatility of 118%, and an average risk-free rate of 2.61. The expense is reflected as Fair value of warrants - extension of expiration dates in the Company’s statements of operations.

As of June 30, 2018, the Company had an aggregate of 2,656,423 outstanding warrants to purchase shares of its common stock with a weighted average exercise price of $0.43, weighted average remaining life of 0.7 years and aggregate intrinsic value of $1,905,475, based upon a stock valuation of $1.15 per share. The intrinsic value is calculated as the difference between the market value of the underlying common stock and the exercise price of the warrants.

On September 30, 2017, the Company entered into a consulting agreement pursuant to which the Company granted a total of 1,250,000 common stock options. 650,000 of the options with a fair value of $486,070 vested immediately, and the remaining 600,000 options vest ratably over twelve months on a quarterly basis with compensation cost measured as the fair value at the end of each reporting period. The options are non-qualified, have an exercise price of $1.00 per share, and will expire 5 years from the grant date. As of December 31, 2017, the Company had recognized compensation cost of $658,383 relating to the vesting of 800,000 options. During the six months ended June 30, 2018, the Company recognized stock compensation costs of $256,962 related to the vesting of 450,000 options based upon a graded vesting schedule. As of June 30, 2018, the remaining 150,000 options to vest were valued at $172,388 based upon a Black-Scholes option-pricing model.

On December 30, 2017, the Company entered into a consulting agreement pursuant to which the Company granted a total of 750,000 common stock options. 250,000 of the options with a fair value of $312,275 vested immediately, and the remaining 500,000 options vested ratably over six months on a quarterly basis with compensation cost measured as the fair value at the end of each reporting period, using a Black Scholes option-pricing model and a graded vesting schedule. The options are non-qualified, have an exercise price of $1.25 per share, and will expire 5 years from the grant date. As of June 30, 2018, all options were fully vested. During the six months ended June 30, 2018, the Company recognized stock compensation costs of $413,877 related to these options.

On January 26, 2018, the Company entered into an agreement with a consultant to develop products based on certain intellectual property owned by the Company (see Note 6). In conjunction with the consulting agreement, the Company granted a stock option to the consultant to purchase a total of 500,000 shares of the common stock of the Company. 250,000 shares of the option with a fair value of $287,500 vested immediately, 125,000 shares vest on December 31, 2018 and the remaining 125,000 shares vest on December 31, 2019 provided the consultant is still an active service provider. As of June 30, 2018, the 250,000 options that remain to vest were valued in total at $287,365 based upon a Black-Scholes option-pricing model. Compensation cost is measured as the fair value at the end of each reporting period and cost is amortized based upon a graded vesting schedule. The options are non-qualified, have an exercise price of $1.25 per share, and will expire 5 years from the grant date. During the six months ended June 30, 2018, the Company recognized stock compensation costs of $384,046 related to these options.

~~As of June 30, 2018, options were valued based upon the Black-Scholes option-pricing model, with a stock price of $1.15, volatility of 120%, and an average risk-free rate of 2.65%.~~

As of June 30, 2018, the Company had an aggregate of 400,000 remaining unvested options outstanding, with estimated fair value of $459,754. The Company remeasures unvested options for non-employees to fair value at the end of each reporting period. The aggregate intrinsic value of options outstanding as of June 30, 2018 was $187,500.

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 ~~condensed~~ financial statements at ~~June 30, 2018~~March 31, 2019 with respect to such ~~matters, including the matter noted below.~~matters.

The exercise prices of warrants outstanding and exercisable as of March 31, 2019 are as follows:

In February and March 2019, investors net exercised a total of 310,000 warrants for 231,740 shares of common stock on a cashless basis.

In February 2019, an investor exercised warrants for 62,500 shares of common stock. The warrants were exercisable for $0.50 per share, and the Company received ~~a payment demand from a former consultant~~$31,250 in cash.

In March 2019, the Company issued 109,038 warrants with an exercise price of $2.88 per share to two convertible note holders pursuant to the anticipated completion of the Company’s IPO (the IPO was completed on April 9, 2019).

As of March 31, 2019, the Company ~~alleging that~~had an aggregate of 896,712 outstanding warrants to purchase shares of its common stock with a weighted average exercise price of $1.19, weighted average remaining life of 0.8 years and aggregate intrinsic value of $2,522,391, based upon a stock valuation of $4.00 per share. The intrinsic value is calculated as the ~~consultant~~difference between the market value of the underlying common stock and the exercise price of the warrants.

A summary of the Company’s stock option activity is ~~owed approximately $192,000 for services rendered.~~as follows:

The exercise prices of options outstanding and exercisable as of March 31, 2019 are as follows:

As of March 31, 2019, options were valued based upon the Black-Scholes option-pricing model, with a stock price of $4.00, volatility of 138%, and an average risk-free rate of 2.21%.

During the three months ended March 31, 2019 and 2018, we recognized aggregate stock-compensation expense of $56,232 and $777,513, respectively, based upon stock prices ranging from $2.30 to $4.00 per share, all of which was recorded in general and administrative expense.

As of March 31, 2019, the Company had an aggregate of 75,000 remaining unvested options outstanding, with a total estimated fair value of $138,516, weighted average exercise price of $2.50, and weighted average remaining life of 2.8 years. The Company ~~has disputed this demand~~remeasures unvested options for non-employees to fair value at the end of each reporting period. The aggregate intrinsic value of options outstanding as of March 31, 2019 was $2,368,750.

During the three months ended March 31, 2019 and ~~attempts to resolve this matter were unsuccessful. On January 29,~~March 31, 2018, the Company ~~filed a lawsuit against the consultant~~incurred and ~~its related entities in the United States District Court for the Southern District~~paid $75,000 and 68,750, respectively, of California (Case No. 18CV200-W-KSC) seeking declaratory relief regarding advisory fees and ownership interest in the Company. On March 6, 2018, the consultant and its related entities filed counterclaims against the Company, seeking payment for services rendered and seeking declaratory relief regarding ownership interest in the Company. The Company intendssalary expense to ~~vigorously defend its rights. The Company cannot predict the outcome of this matter.~~

On ~~July 25, 2018, the Board of Directors approved~~April 9, 2019, the Company ~~entering into~~closed the IPO and issued 1,250,000 shares of its common stock at a ~~product development consulting agreement with a product development company~~public offering price of $4.00 per share for total gross proceeds of $5.0 million, resulting in net proceeds to ~~design and create a working prototype device, named AcQviz, intended to embody the inventions described in US Patent No. 10,022,045 and US Patent Application 15/277,849, each of which~~ the Company ~~owns. Under~~of $3,945,000 after deducting underwriting discounts and commissions and other offering costs and expenses payable by Guardion. The shares began trading on the Nasdaq Capital Market on April 5, 2019, under the symbol “GHSI.” In connection with the IPO, the convertible promissory notes previously issued on March 15, 2019 and March 20, 2019 were automatically converted into 109,038 shares of common stock based on a conversion price of $2.30 per share.

The following table sets forth the Company’s cash, debt and derivative liabilities, and stockholders’ equity as of March 31, 2019 on:

● a pro forma basis giving effect to (i) the issuance of 109,038 shares of common stock to be issued upon the mandatory conversion of the principal amount and accrued interest of the convertible promissory notes issued in March 2019, (ii) the extinguishment of the corresponding derivative liability, and (iii) the sale and issuance by the Company of 1,250,000 shares of common stock in this ~~agreement,~~offering at the ~~product development company is to create a prototype device using sensor circuitry and communication software/firmware unique~~public offering price of $4.00 per share, resulting in net proceeds to the ~~product development company, oversee~~Company of $3,945,000 after deducting underwriting discounts and commissions and estimated offering expenses payable by the ~~integration of the prototype circuitry design into a commercial product, develop specifications for~~Company.

On April 11, 2019, the Company ~~to mass produce~~repaid its promissory note previously issued on March 12, 2019, for a ~~commercial product based on the prototype~~total of $100,849 including accrued interest.

On April 12, 2019, an investor exercised warrants for 26,250 shares of common stock. The warrants were exercisable for $0.50 per share, and ~~integrate the communication channel for the device into various vision testing software programs. In conjunction with the product development agreement, the Board of Directors of~~ the Company ~~also approved~~received $13,125 in cash.

On April 5 and 17, 2019, investors exercised a ~~stock option grant to~~total of 275,000 warrants on a cashless basis resulting in the ~~product development company to purchase 100,000~~issuance of 229,365 shares of ~~the~~ common ~~stock of the Company based on certain performance metrics set forth in the product development agreement~~stock. The warrants were exercisable for $0.50 and ~~stock option agreement. The President of the product development company, Joseph Tate Evans, Jr., is the brother of David Evans, Chief Science Officer and a director of the Company.~~$2.00 per share.

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

As used in this Quarterly Report on Form 10-Q, the terms “we,” “us” “our” and the “Company” mean Guardion Health Sciences, Inc. 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, ~~2017,~~2018, and the notes thereto, which are set forth in the ~~2017~~2018 Form 10-K. All dollar amounts refer to U.S. dollars unless otherwise indicated.

Guardion Health Sciences, Inc. (the “Company” or “we”) was formed in December 2009 in California as a limited liability company under the name P4L Health Sciences, LLC, and weit subsequently changed ~~our~~its name to Guardion Health Sciences, LLC. On June 30, 2015, wethe Company converted from a California limited liability company to a Delaware corporation, changing ~~our~~its name to Guardion Health Sciences, Inc.

~~We are~~The Company is a specialty health sciences company ~~that develops, formulates~~formed to develop, formulate and ~~distributes~~distribute condition-specific medical foods with an initial medical food product on the market under the brand name Lumega-Z^® that replenishes and restores the macular protective pigment. A depleted macular protective pigment is a modifiable risk factor for retina-based diseases such as age-related macular degeneration (“AMD”), computer vision syndrome (“CVS”) and diabetic retinopathy. The Company believes this risk may be modified by taking Lumega-Z to maintain a healthy macular protective pigment. Additional research has also shown a depleted macular protective pigment to be a biomarker for neurodegenerative diseases such as Alzheimer’s disease and dementia. ~~We have had limited operations to date, and have primarily been engaged in research, product development, commercialization and capital raising.~~

~~We have also developed~~The Company invented a proprietary technology, embodied in the Company’s medical device, ~~called~~ the MapcatSF^®that accurately measures the macular pigment optical density (“MPOD”). ~~We invented our own proprietary patented technology embodied in the MapcatSF.~~ On November 8, 2016, the ~~USPTO~~United States Patent and Trademark Office (“USPTO”) issued patent number 9,486,136 for the MapcatSF invention. Using the MapcatSF to measure the MPOD allows one to monitor the increase in the density of the macular protective pigment after taking Lumega-Z. The MapcatSF is a non-mydriatic, non-invasive device that ~~is designed to~~ accurately ~~measure~~measures the MPOD, the lens optical density and lens equivalent age, thereby creating an evidence-based protocol that is shared with the patient. A non-mydriatic device is one that does not require dilation of the pupil for it to function. The MapcatSF is ~~intended to be~~ the first medical device using a patented “single fixation” process and “automatic lens density correction” that produces accurate serialized data.

Lumega-Z has a patent-pending formula that replenishes and restores the macular protective pigment simultaneously delivering critical and essential nutrients to the eye. Formulated by Dr. Sheldon Hendler in 2010, modifications were made over a two-year period to improve the taste and method of delivery. We believe that there is an increasing level of acceptance of medical foods as a primary therapy by patients and healthcare providers to treat pain syndromes, sleep and cognitive disorders, obesity, hypertension, and viral infection. In clinical practice, medical foods are being prescribed as both a standalone therapy and as an adjunct therapy to low doses of commonly prescribed drugs. We believe that medical foods will continue to grow in importance over the coming years.

In September 2017, the Company, through its wholly-owned subsidiary VectorVision Ocular Health, Inc. (“VectorVision”), acquired substantially all of the assets and certain liabilities of VectorVision, Inc., a company that ~~specializes~~specialized in the standardization of contrast sensitivity, glare sensitivity, low contrast acuity, and early treatment diabetic retinopathy study (“ETDRS”) visual acuity testing. VectorVision’s standardization system is designed to provide the practitioner or researcher with the ability to delineate very small changes in visual capability, either as compared to the population or from visit to visit. VectorVision develops, manufactures and sells equipment and supplies for standardized vision testing for use by eye doctors in clinical trials, for real-world vision evaluation, and industrial vision testing. The acquisition ~~expands~~expanded the Company’s technical ~~portfolio~~portfolio. CSV-1000 and CSV-3000 instruments offer auto-calibrated tests to ensure correct testing luminance and contrast levels for consistent, highly accurate and repeatable results. Recently issued patents the Company received for continuously calibrating the light source will be incorporated into the new CSV-2000, in which the proprietary standardized contrast sensitivity test patterns can be presented to the patient using a computer monitor as opposed to the current calibrated backlit system. The Company believes itthe acquisition of VectorVision further establishes its position at the forefront of early detection, intervention and monitoring of a range of eye diseases.

The Company has had limited operations to date and has been primarily engaged in research and development, product commercialization and capital raising activities.

By combining the MapcatSF medical device, the newly acquired VectorVision standardized vision testing technology and Lumega-Z medical food, the Company has developed, based on Management’s knowledge of the industry, what it believes to be the only reliable three-pronged, evidence-based protocol for replenishing and restoring the macular protective pigment, increasing overall retinal health and measuring the related improvements in visual function.

The Company entered into an agreement with a third party in March 2018 to provide a direct sales force comprised of a field-based team of account managers located in key geographical locations based on high population density areas with demographics that match the Company’s target markets. Each account manager will have responsibility for a pre-defined geographical area and will be expected to travel extensively to support the needs of customers. The account managers will be tasked with prospecting for new accounts, closing leads generated by the Company’s marketing efforts, and generating revenue through account management activities including physician and staff training, and implementation of patient education resources. The account managers will also participate in national and regional trade shows and events, including supporting professional optometric and ophthalmological societies at a State level. Each account manager will be tasked with a quota that includes units of Lumega-Z sold, as well as sales of the MapcatSF, CSV-1000 and ESV-3000. Commissions are based on sales performance and achievement of quota. During the second quarter of 2018, the Company hired three members of the sales team as employees of Guardion and cancelled the agreement with the third party sales organization.

On ~~July 10, 2018,~~April 9, 2019, the ~~USPTO issued US Patent No. 10,016,128, titled Method~~Company closed its initial public offering (the “IPO”) of 1,250,000 shares of common stock, par value $0.001 per share, at an IPO price to the public of $4.00 per share resulting in net proceeds to the Company of $3,945,000 after all costs and ~~Apparatus for Visual Acuity Testing. This patent describes an invention pertaining to automatic light calibration of~~expenses. The shares began trading on the ~~display screens used for vision testing. The Company owns this patent, and its VectorVision CSV-1000 and ESV-3000 devices each embody this invention.~~NASDAQ Capital Market on April 5, 2019 under the symbol “GHSI.”

On ~~July 17,~~April 25, 2019, the Company was notified by the State Intellectual Property Office of the People’s Republic of China (“China”) that the Company has been granted trademark registrations in China for its proprietary medical food, Lumega-Z (Registration No. 27151643), and for its proprietary and patented medical device, the MapcatSF (Registration No. 27151644). The trademark registration for the mark LUMEGA-Z is effective from November 7, 2018 to November 6, 2028. The trademark registration for the ~~USPTO issued US Patent No. 10,022,045, also titled Method and Apparatus for Visual Acuity Testing, which describes a methodology~~mark MAPCAT SF is effective from October 28, 2018 to continuously calibrate display monitors to automatically hold display luminance constant for vision testing. This second patent also covers a methodology to compensate for other testing factors, such as room illumination and when patients view the vision test through a mirror, which is a common practice in eye doctors’ offices worldwide. The Company also owns this patent, and its VectorVision CSV-1000 and ESV-3000 devices each embody this invention.October 27, 2028.

These patents serve as the basis for developing follow-on products to the CSV-1000, the CSV-2000, in which the proprietary standardized contrast sensitivity test patterns can be presented to the patient using a computer monitor as opposed to the current calibrated backlit system. The Company also anticipates commercializing these proprietary methodologies for use with other types of vision tests so that other tests can be properly calibrated to adhere to recognized government vision test lighting standards.

~~Prior to the issuance of US Patent No. 9,486,136, the Company filed a continuation application, Patent Application 15/346,010, covering new embodiments around the MapcatSF~~^® ~~device. These new embodiments contain improvements related to the accuracy of intensity measurements made with the device, as well as updated features around photodiode detector calibrations.~~

The Company’s independent registered public accounting firm has also included explanatory language in their opinion accompanying the Company’s audited financial statements for the year ended December 31, ~~2017.~~2018. The Company’s financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

The Company will continue to incur significant expenses for continued commercialization activities related to Lumega-Z, the MapcatSF^®medical device, and VectorVision products. Development and commercialization of medical foods and medical devices 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. On April 9, 2019, the Company completed the IPO, resulting in net cash proceeds of $3,945,000 to the Company. The Company is ~~continuing to attempt~~seeking to raise additional debt and/or equity capital to fund future operations, 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. 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.

On January 30, 2019, following stockholder and Board approval, the Company filed a Certificate of Amendment to its Amended Certificate of Incorporation, as amended (the “Amendment”), with the Secretary of State of the State of Delaware to effectuate a one-for-two (1:2) reverse stock split (the “Reverse Stock Split”) of its common stock, par value $0.001 per share, without any change to its par value. The Amendment became effective on the filing date. The number of shares authorized for common and preferred 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. Proportional adjustments for the Reverse Stock Split were made to the Company’s outstanding common stock, stock options, and warrants as if the split occurred at the beginning of the earliest period presented.

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

Cash balances are maintained at large, well-established financial institutions. At times, cash balances may 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.

The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“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 ~~its~~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.

In connection with the VectorVision transaction, the Company identified and allocated estimated fair values to intangible assets including goodwill and customer relationships.

In accordance with Accounting Standard Codification (“ASC”) 350 – Intangibles – Goodwill and Other, the Company determined whether these assets are expected to have indefinite (such as goodwill) or limited useful lives, and for those with limited lives, the Company established an amortization period and method of amortization. The Company’s goodwill and other intangible assets are subject to periodic impairment testing.

The Company utilized the services of an independent third-party valuation firm to assist it in identifying intangible assets and in estimating their fair values. The useful lives for its intangible assets other than goodwill were estimated based on Management’s consideration of various factors, including assumptions that market participants might use about sales expectations as well as potential effects of obsolescence, competition, technological progress and the regulatory environment. Because the future pattern in which the economic benefits of these intangible assets may not be reliably determined, amortization expense is generally calculated on a straight-line basis.

The Company reviews ~~long-lived assets, including property and equipment, identifiable~~all intangible assets ~~and goodwill~~ for impairment ~~at each fiscal year end or~~ when ~~events or changes in~~ circumstances indicate that their carrying values may not be recoverable. If the carrying value of ~~these assets may exceed their current fair values. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of~~ an asset togroup is not recoverable, the ~~estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows,~~Company recognizes an impairment ~~charge is recognized~~loss for the ~~amount by which the~~excess carrying ~~amount of the asset exceeds~~value over the fair value in its consolidated statements of the assets. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell and are no longer depreciated. The Company has not historically recorded any impairment to its long-lived assets. In the future, if events or market conditions affect the estimated fair value to the extent that a long-lived asset is impaired, the Company will adjust the carrying value of these long-lived assets in the period in which the impairment occurs.operations. As of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the Company ~~had not deemed any long-lived assets as impaired and~~ was not aware of the existence of any indicators of impairment of its intangibles at such dates.

Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. The Company evaluates goodwill for impairment on an annual basis or whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. The Company conducts its annual impairment analysis in the beginning of the fourth quarter of each fiscal year. Impairment of goodwill is tested at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. Estimations and assumptions regarding the number of reporting units, future performances, results of the Company’s operations and comparability of its market capitalization and net book value will be used. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and an impairment loss is measured by the resulting amount. As of March 31, 2019 and December 31, 2018, the Company was not aware of the existence of any indicators of impairment of its goodwill at such dates.

Stock-based payments to officers, directors, ~~consultants, contractors,~~ and employees, which include grants of employee stock options, are recognized in the financial statements based on their fair values. Stock option grants, which are generally time vested, will be measured at the grant date fair value and charged to operations on a straight-line basis over the vesting period. The fair value of stock options is determined utilizing the Black-Scholes option-pricing model, which is affected by several variables, including the risk-free interest rate, the expected dividend yield, the expected life of the equity award, the exercise price of the stock option as compared to the fair market value of the common stock on the grant date and the estimated volatility of the common stock over the term of the equity award.

~~The~~In prior periods, the Company ~~accounts~~accounted for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. On January 1, 2019, the Company adopted Accounting Standards Update (ASU) 2018-07 which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Non-employee stock-based compensation charges generally are amortized over the vesting period using a graded vesting basis. In certain circumstances where there are no future performance requirements by the non-employee, grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Until the Company has established a trading market for its common stock, estimated volatility is based on the average historical volatilities of comparable public companies in a similar industry. The expected dividend yield is based on the current yield at the grant date. The Company has never declared or paid dividends on its common stock and has no plans to do so for the foreseeable future.

The fair value of common stock was determined based on management’s judgment. In order to assist management in calculating such fair value, the Company retained a third-party valuation firm in determining the value of the Company. The third-party valuation firm’s input was utilized in determining the related per unit or share valuations of the Company’s equity used during 2017. Management used a valuation of $0.88 per share for the six months ended June 30, 2017. Internal valuations are based on various inputs, including valuation reports prepared by third-party valuation firms and are impacted by the dilutive effect of the issuance of common shares as compensation during the periods. There are numerous acceptable ways to estimate company value, including using net tangible assets, a market-based approach, or discounted cash flows. The Company considered alternative methods and concluded that due to the lack of suitably comparable market data, the discounted cash flows method was the most appropriate. A discounted cash flows (i.e. free cash flows to equity) methodology was applied by the third-party valuation firm to assist management in their determination of the $0.88 used during 2017. This methodology used multiple years of balance sheet and income statement projections along with the following primary assumptions:

Due to the availability of historical data from the Company’s recent ~~common~~preferred stock sales, Management used a valuation of ~~$1.15~~$2.30 for accounting purposes during the first quarter of 2018. Management used a valuation $4.00 for the ~~six months ended June 30, 2018.~~first quarter of 2019. Management considered business and market factors affecting the Company during ~~the six-month~~these periods, ~~ended June 30, 2018 and 2017,~~ including capital raising efforts, its proprietary technology, and other factors. Based on this evaluation, management believes that ~~$1.15 and $0.88 per share~~its valuations are appropriate for accounting purposes at ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively.

The Company recognizes stock compensation expense, on stock purchases at a price less than fair value, and for fully-vested stock issued to consultants and other service providers, for the excess of fair value of the stock over the price paid for the stock. The Company recognizes the fair value of stock-based compensation within its statements of operations with classification depending on the nature of the services rendered. ~~The Company will issue new shares to satisfy stock option exercises.~~

Based on the availability of sufficient funding, the Company intends to increase its commercialization activities and:

The FDA and other regulatory bodies require electronic medical devices to comply with IEC 60601 standards. The International Electrical Commission (“IEC”) established technical standards for the safety and effectiveness of medical electrical equipment. Adherence to these standards is required for commercialization of electrical medical equipment. As a medical device powered by electricity, the MapcatSF will need to undergo testing to demonstrate compliance with the IEC 60601 standards. This testing is typically conducted by a Nationally Recognized Testing Laboratory (“NRTL”), which is an independent laboratory recognized by the Occupational Safety and Health Administration (“OSHA”) to test products to the specifications of applicable product safety standards. The Company is in discussions with its contract manufacturer of the MapcatSF to engage an NRTL at the appropriate juncture prior to commercialization of the MapcatSF. The relevant predicate device for the MapcatSF is the MPS II, the applicable Class I product code for the MapcatSF is HJW and the applicable Code of Federal Regulation is 886.1050. The FDA does not require test documents to be submitted to the FDA for a Class I medical device, but that the evidence of such testing be placed in a Design History file and be kept internally at the company or manufacturer and readily available should the FDA or other regulatory bodies request to review the testing documents. While the FDA does not require that a Class I medical device have formal validation, the Company expects to complete applicable IEC 60601-1 testing prior to commercialization because the Company believes in marketing a product that has evidence that it is safe and effective.

Through ~~June 30, 2018,~~March 31, 2019, the Company had limited operations and has primarily been engaged in ~~research and~~product development, ~~product~~ 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 ~~research and development of~~ both medical foods and medical diagnostic equipment for the treatment of various eye diseases. The Company had limited revenue during the ~~six-month periods~~three months ended ~~June 30, 2018~~March 31, 2019 and ~~2017. In the fourth quarter of 2017, the Company began recognizing product revenue from the sale of VectorVision products in addition to sales of its proprietary product, Lumega-Z.~~2018.

Comparison of Three Months Ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~

For the three months ended ~~June 30, 2018,~~March 31, 2019, revenue from product sales was ~~$220,778~~$242,538 compared to ~~$59,977~~$193,040 for the three months ended ~~June 30, 2017,~~March 31, 2018, resulting in an increase of ~~$160,801~~$49,498 or ~~268%~~26%. The increase reflects both an increased customer base for Lumega-Z as the Company expands into new clinics and increased sales of VectorVision products. $79,993, or 36% of revenue in the second quarter of 2018 was generated by sales of Lumega-Z products, representing a 33% increase in Lumega-Z sales over the prior period. As of June 30, 2018, the Company had a sales backlog of approximately $89,000 in VectorVision products, all of which were delivered and recognized as revenue in July.

~~The following table presents the Company’s revenues disaggregated by product type:~~

For the three months ended ~~June 30, 2018,~~March 31, 2019, cost of goods sold was ~~$87,776~~$93,492 compared to ~~$29,692~~$79,278 for the three months ended ~~June 30, 2017,~~March 31, 2018, resulting in an increase of ~~$58,084~~$14,214 or ~~196%~~18%. The increase reflects the additional sales recorded in 2018.

For the three months ended ~~June 30, 2018,~~March 31, 2019, gross profit was ~~$133,002~~$149,046 compared to ~~$30,285~~$113,762 for the three months ended ~~June 30, 2017,~~March 31, 2018, resulting in an increase of ~~$102,717~~$35,284 or ~~339%~~31%. Gross profit represented 61% of revenues the three months ended March 31, 2019, versus 59% of revenue for the three months ended March 31, 2018. The increase isin gross profit in 2019 was due primarily ~~due~~ to ~~the sales of VectorVision products, which did not occur~~pricing and product mix changes in ~~the prior period.~~2019.

For the three months ended ~~June 30, 2018,~~March 31, 2019, research and development costs were ~~$34,320~~$29,028 compared to ~~$15,530~~$159,588 for the three months ended ~~June 30, 2017,~~March 31, 2018, resulting in ~~an increase~~a decrease of ~~$18,790~~$130,560 or ~~121%~~82%. The ~~increase~~decrease was due to ~~research~~reduced engineering development costs associated with the Company’s MapcatSF^® medical ~~device.~~device during 2019.

For the three months ended ~~June 30, 2018,~~March 31, 2019, sales and marketing expenses were ~~$378,750~~$353,537 compared to ~~$101,598~~$605,990 for the three months ended ~~June 30, 2017.~~March 31, 2018. The ~~increase~~decrease in sales and marketing expenses of ~~$277,152~~$252,453 or ~~273% compared to the prior period was due to costs associated with engagement of a third party national sales team, as well as an increased presence at trade shows.~~

~~For the three months ended June 30, 2018, general and administrative expenses were $1,034,914 compared to $766,894 for the three months ended June 30, 2017. The increase of $268,020 or 35%~~42% compared to the prior period was primarily due to ~~increased labor, legal, and consulting~~ costs associated with engagement of a third-party contract sales organization in 2018. The contract sales agreement was cancelled during the ~~period.~~second quarter of 2018.

For the three months ended ~~June 30, 2018, interest expense was $710~~March 31, 2019, general and administrative expenses were $947,974 compared to ~~$1,924~~$1,680,810 for the three months ended ~~June 30, 2017.~~March 31, 2018. The decrease of ~~$1,214,~~$732,836 or ~~63%,~~44% compared to the prior period was primarily due to a decrease in stock compensation costs during the ~~repayment or conversion of all promissory notes and convertible debt that had been outstanding during 2017.~~current period.

During April and May of 2018, the Company offered exercise period extensions to stockholders who held warrants to purchase shares of common stock of the Company that were scheduled to expire on May 1, 2018. The Company recognized expense of $494,391 relating to the extension of the exercise period of the warrants using a Black-Scholes option-pricing model to estimate fair value.

For the three months ended ~~June 30, 2018,~~March 31, 2019, interest expense was $17,572 compared to $835 for the three months ended March 31, 2018. The increase of $16,737 or 2004%, was due primarily to non-cash amortization expense related to the debt discount associated warrants issued in March 2019.

During March 2019, the Company issued $250,000 of convertible promissory notes to two investors. the notes were convertible upon the completion of the IPO, into 109,038 shares of common stock. in connection with the notes, the Company also issued 109,038 warrants to the investors. See Note 9 of the condensed consolidated financial statements for details of the notes and associated warrants.

For the three months ended March 31, 2019, the Company incurred a net loss of ~~$1,810,083,~~$1,385,099, compared to a net loss of ~~$855,661~~$2,333,461 for the three months ended ~~June 30, 2017.~~March 31, 2018. The ~~increase~~decrease in net loss of ~~$954,422~~$948,362 or ~~112%~~41% compared to the prior year period was primarily due to a decrease in stock compensation costs during the ~~non-cash expense related to the extension of warrant expiration dates, as well as to the increased costs associated with the sales team, legal expenses, and its internal labor force.~~current period.

As of March 31, 2019, Management reports its operating results in two operating segments: Medical Foods, and Vision Testing Diagnostics. As of March 31, 2019, the TDSI subsidiary does not yet earn revenues or meet the required criteria to be considered a reportable operating segment.

The following tables set forth our results of operations by segment (expenses allocated to Corporate consist of non-cash stock compensation expense, depreciation and amortization, and corporate legal fees):

For the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, revenue from ~~product sales~~our Medical Foods segment was ~~$413,818~~$99,934 compared to ~~$115,912~~$72,138 for the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2018, resulting in an increase of ~~$297,906~~$27,796 or ~~257%~~39%. The increase reflects ~~both~~ an increased customer base for Lumega-Z as the Company expands into new ~~clinics and~~clinics. For the three months ended March 31, 2019, revenue from our Vision Testing Diagnostics segment was $142,604 compared to $120,902 for the three months ended March 31, 2018, resulting in an increase of $21,702 or 18%. The increase was due to increased distributor sales ~~of VectorVision products. $152,132, or 37% of revenue~~ in 2018 was generated by sales of Lumega-Z products, representing a 31% increase in Lumega-Z sales over the prior period. As of June 30, 2018, the Company had a sales backlog of approximately $89,000 in VectorVision products, all of which were delivered and recognized as revenue in July.2019.

~~The following table presents the Company’s revenues disaggregated by product type:~~

For the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, cost of goods sold from our Medical Foods segment was ~~$167,055~~$38,272 compared to ~~$52,326~~$32,188 for the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2018, resulting in an increase of ~~$114,729~~$6,084 or ~~219%~~19%. For the three months ended March 31, 2019, cost of goods sold from our Vision Testing Diagnostics segment was $55,220 compared to $47,090 for the three months ended March 31, 2018, resulting in an increase of $8,130 or 17%. The increase for both segments reflects the additional sales recorded in 2018.

For the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, gross profit from the Medical Foods segment was ~~$246,763~~$61,662 compared to ~~$63,586~~$39,950 for the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2018, resulting in an increase of ~~$183,177~~$21,712 or ~~288%~~54%. ~~The increase is primarily due to the sales of VectorVision products, which did not occur in the prior period.~~

For the ~~six~~three months ended ~~June 30, 2018, research and development costs were $194,708~~March 31, 2019, gross profit from the Vision Testing Diagnostics segment was $87,384 compared to ~~$25,770~~$73,812 for the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2018, resulting in an increase of ~~$168,938~~$13,572 or ~~656%~~18%. The increase ~~was~~is due to ~~research associated with~~ the ~~Company’s MapcatSF~~^® ~~medical device.~~

~~For~~additional sales recorded for both segments in the ~~six~~current year. Gross profit overall represented 61% of revenues for the three months ended ~~June 30, 2018, sales and marketing expenses were $984,464 compared to $178,333~~March 31, 2019, versus 59% of revenue for the ~~six~~three months ended ~~June 30, 2017.~~March 31, 2018. The increase in gross profit in 2018 was due increased sales and ~~marketing expenses of $806,131 or 452% compared~~ to ~~the prior period was due to costs associated with engagement of a third party national sales team, an increased presence at trade shows,~~pricing and ~~increased consulting, marketing and promotional costs.~~product mix changes in 2018.

For the six months ended June 30, 2018, general and administrative expenses were $2,714,680 compared to $1,365,807 for the six months ended June 30, 2017. The increase of $1,348,873 or 99% compared to the prior period was primarily due to a $562,000 increase in non-cash stock compensation expense. Labor, legal, and consulting costs also increased during the period.

For the six months ended June 30, 2018, interest expense was $1,545 compared to $18,355 for the six months ended June 30, 2017. The decrease of $16,810, or 92%, was due to the repayment or conversion of all promissory notes and convertible debt that had been outstanding during 2017.

For the six months ended June 30, 2018, the Company incurred a net loss of $4,143,025, compared to a net loss of $1,524,679 for the six months ended June 30, 2017. The increase in net loss of $2,618,346 or 172% compared to the prior year period was due to the non-cash expenses related to stock compensation and to the extension of warrant expiration dates, as well as to the increased costs associated with the sales team, legal expenses, and its internal labor force.

Since its formation in 2009, the Company has devoted substantial effort and capital resources to the development and commercialization activities related to its lead product Lumega-Z and its MapcatSF medical device. As a result of these and other activities, the Company utilized cash in operating activities of ~~$2,424,058~~$586,085 during the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. The Company had ~~positive~~negative working capital of ~~$1,947,866~~$1,024,828 at ~~June 30, 2018~~March 31, 2019 due ~~primarily~~ to ~~its sale~~liabilities associated with the issuance of ~~its common stock in November 2017.~~promissory and convertible promissory notes during March 2019 as well as accrued legal costs related to the Company’s IPO process. As of ~~June 30, 2018,~~March 31, 2019, the Company had cash in the amount of ~~$2,066,365~~$174,298 and no available borrowings. 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 and exercise of warrants.~~stocks.

The financial statements have been prepared assuming the Company will continue as a going concern. ~~The Company had a net loss of $4,143,025 and utilized cash in operating activities of $2,424,058 during the six months ended June 30, 2018.~~ The Company expects to continue to incur net losses and negative operating cash flows in the near-term. As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued.

The Company’s independent registered public accounting firm has also included explanatory language in their opinion accompanying the Company’s audited financial statements for the year ended December 31, ~~2017.~~2018. The Company’s financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

The Company will continue to incur significant expenses for continued commercialization activities related to Lumega-Z, the MapcatSF^® medical device, and VectorVision products. Development and commercialization of medical foods and medical devices 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. On April 9, 2019, the Company completed the IPO, resulting in net cash proceeds of $3,945,000 to the Company. The Company is ~~continuing attempts~~seeking to raise additional debt and/or equity capital to fund future operations, 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. 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.

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

Net cash used in operating activities was ~~$2,424,058~~$586,085 during the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, versus ~~$1,023,321~~$1,353,530 used during the comparable prior year period. The ~~increase~~decrease in ~~2018~~2019 was due primarily to higher sales, marketing, ~~labor,~~product development, and legal ~~costs.~~costs paid in the prior year period.

Net cash used in investing activities was ~~$187,073~~$4,815 for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 and ~~$5,500~~$145,111 for the ~~six~~three months ended ~~June 30, 2017.~~March 31, 2018. In January 2018, we acquired the rights to a trademark portfolio for $50,000. In addition, we ~~invested in~~purchased a trade show booth in ~~February.~~February 2018 and have invested in MapCatSF equipment and internal-use software development.

Net cash provided by financing activities was $94,250 for the three months ended March 31, 2019 was due to the issuance in March 2019 of $350,000 in promissory and convertible promissory notes as well as from the exercise of warrants for proceeds of $31,250. These proceeds were partially offset by payment of costs directly related to the Company’s IPO. Net cash used in financing activities was ~~$57,734~~$38,240 for the ~~six~~three months ended ~~June 30,~~March 31, 2018 was due primarily to ~~the Company~~our payoff of a line of credit balance that had been assumed ~~from the~~during our 2017 VectorVision transaction. Financing activities for the prior year comparable period provided proceeds of $100,000 from the issuance of short-term loans, offset by payments of principal and interest on loans of $14,000, $1,100,000 in proceeds from the issuance of Series B Preferred Stock, and $77,837 in amounts due to related parties on a net basis.acquisition.

At ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017, we~~2018, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Accounting Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon this evaluation, the Chief Executive Officer and Chief Accounting Officer each concluded that the Company’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that such information has been accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Accounting Officer, in a manner that allows timely decisions regarding required disclosure.

There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation that occurred during the first quarter ended in ~~2018~~2019 that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.

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. In the opinion of management of the Company, adequate provision has been made in the Company’s condensed consolidated financial statements at ~~June 30, 2018~~March 31, 2019 with respect to such ~~matters, including the matter noted below.~~matters.

On or about July 26, 2017, the Company received a payment demand from a former consultant to the Company alleging that the consultant is owed approximately $192,000 for services rendered. The Company has disputed this demand and attempts to resolve this matter were unsuccessful. On January 29, 2018, the Company filed a lawsuit against the consultant and its related entities in the United States District Court for the Southern District of California (Case No. 18CV200-W-KSC) seeking declaratory relief regarding advisory fees and ownership interest in the Company. On March 6, 2018, the consultant and its related entities filed counterclaims against the Company, seeking payment for services rendered and seeking declaratory relief regarding ownership interest in the Company. The Company intends to vigorously defend its rights. The Company cannot predict the outcome of this matter.

On ~~January 26, 2018,~~March 15, 2019 and March 20, 2019, the Company entered into ~~an agreement with a consultant~~separate securities purchase agreements (the “Purchase Agreements”) pursuant to ~~develop products based on certain intellectual property owned by~~which the Company ~~(see Note 6)~~issued convertible promissory notes (the “Debentures”) and common stock purchase warrants (the “Warrants”) to two investors in exchange for $250,000 (collectively, the “Private Placement”). ~~In conjunction with the consulting agreement, the Company granted a stock option~~The securities issued pursuant to the ~~consultant~~Purchase Agreements were issued in reliance upon the exemption from registration pursuant to ~~purchase a total~~Section 4(a)(2) and Rule 903 of ~~500,000 shares~~Regulation S promulgated under the Securities Act of the common stock of the Company. 250,000 shares of the option with a fair value of $287,500 vested immediately, 125,000 shares vest on December 31, 2018 and the remaining 125,000 shares vest on December 31, 2019 provided the consultant is still an active service provider. As of June 30, 2018, the 250,000 options that remain to vest were valued in total at $287,365 based upon a Black-Scholes option-pricing model. Compensation cost is measured1933, as the fair value at the end of each reporting period and cost is amortized based upon a graded vesting schedule. The options are non-qualified, have an exercise price of $1.25 per share, and will expire 5 years from the grant date. During the six months ended June 30, 2018, the Company recognized stock compensation costs of $384,046 related to these options.amended.

On July 25, 2018, the Company entered into a product development consulting agreement with a product development company to design and create a working prototype device based on certain intellectual property owned by the Company. In conjunction with the product development agreement, the Company granted a stock option to the consultant to purchase a total of 100,000 shares of the common stock of the Company. 25,000 shares of the option vested immediately, 50,000 shares vest upon completion of design and construction of the AcQviz device to the reasonable satisfaction of the Company, and the remaining 25,000 shares vest upon integration of the AcQviz send/receive functionality with vision testing software platform to the reasonable satisfaction of the Company.

A list of exhibits required to be filed as part of this report is set forth in the Index to Exhibits, which is presented elsewhere in this document, and is incorporated herein by reference.

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 10th day of ~~August, 2018.~~May, 2019.

Large accelerated filer	¨[ ]	Accelerated filer	¨[ ]
Non-accelerated filer	¨[X]	Smaller reporting company	x[X]
~~(Do not check if a smaller reporting company)~~		Emerging growth company	x[X]

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

		Page No.
PART I – FINANCIAL INFORMATION

ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	4

	Balance Sheets – As of ~~June 30, 2018~~March 31, 2019 (Unaudited) and December 31, ~~2017~~2018	4

	Statements of Operations (Unaudited) – Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2019 and 2018 ~~and June 30, 2017~~	5

	Statement of Stockholders’ Equity (Unaudited) – ~~Six~~Three Months Ended ~~June 30,~~March 31, 2019 and 2018	6

	Statements of Cash Flows (Unaudited) – ~~Six~~Three Months Ended ~~June 30,~~March 31, 2019 and 2018 ~~and June 30, 2017~~	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1820

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	28

ITEM 4.	CONTROLS AND PROCEDURES	2829

PART II – OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	29

ITEM 1A.	RISK FACTORS	29

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	29

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	29

ITEM 4.	MINE SAFETY DISCLOSURES	29

ITEM 5.	OTHER INFORMATION	3029

ITEM 6.	EXHIBITS	3029

SIGNATURES		30

	June 30,			December 31,			March 31,			December 31,
	2018			2017			2019			2018
	(Unaudited)						(Unaudited)
Assets

Current assets
Cash	$	2,066,365		$	4,735,230		$	174,298		$	670,948
Accounts receivable		29,843			72,771			15,086			28,203
Inventories		412,357			154,730			303,819			357,997
Prepaid expenses		25,830			117,164			51,161			47,773

Total current assets		2,534,395			5,079,895			544,364			1,104,921

Deposits		11,751			10,470			11,751			11,751
Property and equipment, net		191,427			95,597			265,176			274,804
Right of use asset, net								626,667			-
Deferred offering costs								557,000			270,000
Intangible assets, net		563,423			620,741			402,445			456,104
Goodwill		1,563,520			1,563,520			1,563,520			1,563,520

Total assets	$	4,864,516		$	7,370,223		$	3,970,923		$	3,681,100

Liabilities and Stockholders’ Equity

Current liabilities
Accounts payable and accrued liabilities	$	457,438		$	311,236		$	829,040		$	413,925
Accrued expenses and deferred rent		11,618			12,043			65,000			81,412
Line of credit		-			30,535
Due to related parties		117,473			146,133
Derivative warrant liability								436,034			-
Lease liability – current								121,546			-
Convertible notes payable								17,024			-
Notes payable								100,548			-
Total current liabilities								1,569,192			495,337

Total current liabilities		586,529			499,947
Lease liability – long term								513,585			-

Total liabilities								2,082,777			495,337

Commitments and contingencies

Stockholders’ Equity

Preferred stock, $0.001 par value; 10,000,000 shares authorized		-			-			-			-
Common stock, $0.001 par value; 90,000,000 shares authorized; 40,329,475 and 40,183,475 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively		40,329			40,183
Common stock, $0.001 par value; 90,000,000 shares authorized; 20,856,611 and 20,564,328 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively								20,857			20,564
Additional paid-in capital		35,246,639			33,696,049			37,885,751			37,798,562
Accumulated deficit		(31,008,981	)		(26,865,956	)		(36,018,462	)		(34,633,363	)

Total stockholders’ equity		4,277,987			6,870,276			1,888,146			3,185,763

Total liabilities and stockholders’ equity	$	4,864,516		$	7,370,223		$	3,970,923		$	3,681,100

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenue	$	220,778		$	59,977		$	413,818		$	115,912
Medical foods													$	99,934		$	72,138
Vision testing diagnostics														142,604			120,902
Total Revenue														242,538			193,040

Cost of goods sold		87,776			29,692			167,055			52,326
Medical foods														38,272			32,188
Vision testing diagnostics														55,220			47,090
Total Cost of goods sold														93,492			79,278

Gross profit		133,002			30,285			246,763			63,586			149,046			113,762

Operating expenses
Research and development		34,320			15,530			194,708			25,770			29,028			159,588
Sales and marketing		378,750			101,598			984,464			178,333			353,537			605,990
General and administrative		1,034,914			766,894			2,714,680			1,365,807			947,974			1,680,810

Total operating expenses		1,447,984			884,022			3,893,852			1,569,910			1,330,539			2,446,388

Loss from operations		(1,314,982	)		(853,737	)		(3,647,089	)		(1,506,324	)		(1,181,493	)		(2,332,626	)

Other expenses:
Interest expense		710			1,924			1,545			18,355			17,572			835
Fair value of warrants - extension of expiration dates		494,391			-			494,391			-
Fair value of warrants														186,034			-

Total other expenses		495,101			1,924			495,936			18,355			203,606			835

Net loss		(1,810,083	)		(855,661	)		(4,143,025	)		(1,524,679	)	$	(1,385,099	)	$	(2,333,461	)

Adjustments related to Series A and Series B convertible preferred stock:
Accretion of deemed dividend		-			(53,675	)		-			(85,517	)
Dividend declared		-			(45,106	)		-			(81,183	)
Net loss attributable to common shareholders	$	(1,810,083	)	$	(954,442	)	$	(4,143,025	)	$	(1,691,379	)

Net loss per common share – basic and diluted	$	(0.04	)	$	(0.04	)	$	(0.10	)	$	(0.07	)	$	(0.07	)	$	(0.12	)
Weighted average common shares outstanding – basic and diluted		40,329,475			25,470,418			40,322,215			25,287,759			20,709,469			20,157,461

	Common Stock
	Shares		Amount		Additional Paid-In Capital		Accumulated Deficit			Total Stockholders’ Equity
Balance at December 31, 2017		40,183,475	$	40,183	$	33,696,049	$	(26,865,956	)	$	6,870,276
Fair value of vested stock options		-		-		1,054,885		-			1,054,885
Issuance of common stock – warrant exercises		146,000		146		1,314		-			1,460
Fair value of warrants - extension of expiration dates						494,391					494,391
Net loss		-		-		-		(4,143,025	)		(4,143,025	)
Balance at June 30, 2018		40,329,475	$	40,329	$	35,246,639	$	(31,008,981	)	$	4,277,987

	Common Stock				Additional Paid-In		Accumulated			Total Stockholders’
	Shares		Amount		Capital		Deficit			Equity
	Three Months Ended March 31, 2019
Balance at December 31, 2018		20,564,328	$	20,564	$	37,798,562	$	(34,633,363	)	$	3,185,763
Fair value of vested stock options		-		-		56,232		-			56,232
Issuance of common stock – warrant exercises		292,283		293		30,957		-			31,250
Net loss		-		-		-		(1,385,099	)		(1,385,099	)
Balance at March 31, 2019		20,856,611	$	20,857	$	37,885,751	$	(36,018,462	)	$	1,888,146

	Three Months Ended March 31, 2018
Balance at December 31, 2017		20,091,761	$	20,092	$	33,716,140	$	(26,865,956	)	$	6,870,276
Fair value of vested stock options		-		-		777,513		-			777,513
Issuance of common stock – warrant exercises		73,000		73		1,387		-			1,460
Net loss		-		-		-		(2,333,461	)		(2,333,461	)
Balance at March 31, 2018		20,164,761	$	20,165	$	34,495,040	$	(29,199,417	)	$	5,315,788

	Six Months Ended June 30,						Three Months Ended September 30,
	2018			2017			2018			2017
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Operating Activities
Net loss	$	(4,143,025	)	$	(1,524,679	)	$	(1,385,099	)	$	(2,333,461	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		148,560			31,331			68,102			73,022
Amortization of debt discount								16,545			-
Amortization of lease right								30,502			-
Accrued interest expense included in notes payable		-			13,746			1,027			-
Stock-based compensation		1,054,885			405,918			56,231			777,513
Stock-based compensation – related parties		-			108,051
Fair value of warrant modification		494,391			-
Fair value of warrants – derivative liability								186,034			-
Changes in operating assets and liabilities:
(Increase) decrease in -
Accounts receivable		42,928			11			13,116			15,345
Inventories		(257,627	)		(64,305	)		54,178			(28,188	)
Deposits and prepaid expenses		90,053			22,788			(3,388	)		2,486
Lease liability								(28,088	)		-
Increase (decrease) in -
Accounts payable and accrued expenses		146,202			57,442			415,118			135,324
Accrued and deferred rent costs		(425	)		(73,624	)		(10,363	)		4,429

Net cash used in operating activities		(2,424,058	)		(1,023,321	)		(586,085	)		(1,353,530	)

Investing Activities
Purchase of property and equipment		(137,073	)		(5,500	)		(4,815	)		(95,111	)
Purchase of intellectual property		(50,000	)		-			-			(50,000	)

Net cash used in investing activities		(187,073	)		(5,500	)		(4,815	)		(145,111	)

Financing Activities
Proceeds from issuance of convertible notes								250,000			-
Proceeds from issuance of promissory notes		-			100,000			100,000			-
Payments on promissory notes		-			(14,000	)
Payments on line of credit		(30,535	)		-			-			(30,535	)
Proceeds from issuance of preferred stock		-			1,100,000
Proceeds from exercise of warrants		1,460			-			31,250			1,460
(Decrease) increase in due to related parties		(28,659	)		77,837
Deferred financing costs of IPO								(287,000	)		-
Decrease in due to related parties								-			(9,165	)

Net cash (used in) provided by financing activities		(57,734	)		1,263,837
Net cash provided by (used in) financing activities								94,250			(38,240	)

Cash:
Net (decrease) increase		(2,668,865	)		235,016
Net decrease								(496,650	)		(1,536,881	)
Balance at beginning of period		4,735,230			62,520			670,948			4,735,230
Balance at end of period	$	2,066,365		$	297,536		$	174,298		$	3,198,349

Supplemental disclosure of cash flow information:
Cash paid for-
Interest	$	-		$	1,500		$	-		$	-
Income taxes	$	-		$	-		$	-		$	-

Non-cash financing activities:
Issuance of common stock dividends on preferred stock	$	-		$	81,183
Fair value of warrants issued in connection with convertible notes							$	436,034		$	-
Recording of lease asset and liability upon adoption of ASU 2016-02							$	663,218			-

	Three Months Ended June 30,				Six Months Ended June 30,
��	2018		2017		2018		2017
Lumega-Z and supplements	$	79,993	$	59,977	$	152,132	$	115,912
VectorVision medical devices and supplies		140,785		-		261,686		-
	$	220,778	$	59,977	$	413,818	$	115,912

	For the Three Months Ended March 31, 2019
	Corporate			Medical Foods			Vision Testing Diagnostics			Total

Revenue	$	-		$	99,934		$	142,604		$	242,538

Cost of goods sold		-			38,272			55,220			93,492

Gross profit		-			61,662			87,384			149,046

Operating expenses		334,775			884,701			111,063			1,330,539

Loss from operations	$	(334,775	)	$	(823,039	)	$	(23,679	)	$	(1,181,493	)

	As of March 31, 2019
	Corporate		Medical Foods		Vision Testing Diagnostics		Total
Current assets
Cash	$	-	$	164,914	$	9,384	$	174,298
Inventories		-		170,554		133,265		303,819
Other		-		46,950		19,297		66,247
Total current assets		-		382,418		161,946		544,364

Right to use asset		626,667		-		-		626,667
Property and equipment, net		-		255,313		9,863		265,176
Deferred offering		557,000		-		-		557,000
Intangible assets, net		402,445		-		-		402,445
Goodwill		1,563,520		-		-		1,563,520
Other		-		11,751		-		11,751

Total assets	$	3,149,632	$	649,482	$	171,809	$	3,970,923

	As of December 31, 2018
	Corporate		Medical Foods		Vision Testing Diagnostics		Total
Current assets
Cash	$	-	$	552,613	$	118,335	$	670,948
Inventories		-		235,957		122,040		357,997
Other		-		44,110		31,866		75,976
Total current assets		-		832,680		272,241		1,104,921

Property and equipment, net		-		264,178		10,626		274,804
Deferred offering		270,000		-		-		270,000
Intangible assets, net		456,104		-		-		456,104
Goodwill		1,563,520		-		-		1,563,520
Other		-		11,751		-		11,751

Total assets	$	2,289,624	$	1,108,609	$	282,867	$	3,681,100

For Years Ended December 31,
2019	$	160,978
2020		165,320
2021		16,307
2022		9,840
	$	352,445

	Fair Values
Common stock consideration	$	2,287,500
Liabilities assumed		108,722
Total purchase consideration		2,396,222

Cash		(4,895	)
Accounts receivable		(50,105	)
Inventory		(93,293	)
Prepaid assets		(551	)
Property and equipment		(9,458	)
Intangible assets		(674,400	)
Goodwill	$	1,563,520

	Three Months Ended June 30,			Six Months Ended June 30,
	2017			2017
Pro forma net revenues	$	121,622		$	366,793
Pro forma net loss attributable to common shareholders	$	(1,088,909	)	$	(1,825,640	)
Pro forma net loss per share	$	(0.04	)	$	(0.06	)

	~~Shares~~
~~December 31, 2017~~		~~2,983,666~~
~~Granted~~		-
~~Forfeitures~~		-
~~Expirations~~		~~(181,243~~	)
~~Exercised~~		~~(146,000~~	)
~~June 30, 2018, all exercisable~~		~~2,656,423~~

	~~Shares~~
~~December 31, 2017~~		~~2,125,000~~
~~Granted~~		~~500,000~~
~~Forfeitures~~		-
~~Exercised~~		-
~~June 30, 2018, outstanding~~		~~2,625,000~~
~~June 30, 2018, exercisable~~		~~2,225,000~~

	Shares			Weighted Average Exercise Price			Weighted Average Remaining Contractual Term (Years)
December 31, 2018		1,230,674			0.71			0.29
Granted		109,038			0.35			0.60
Forfeitures		-			-			-
Expirations		(70,500	)		(0.11	)		-
Exercised		(372,500	)		(0.24	)		-
March 31, 2019, all exercisable		896,712		$	1.19			0.79

Warrants Outstanding and Exercisable (Shares)		Exercise Prices
	536,250	$	0.50
	5,000		1.00
	30,000		1.50
	216,424		2.00
	109,038		2.88
	896,712

Options Outstanding (Shares)		Options Exercisable (Shares)		Exercise Prices
	625,000		625,000	$	2.00
	62,500		62,500		2.30
	675,000		600,000		2.50
	1,362,500		1,287,500

	As of March 31, 2019
	Actual			Pro Forma
Cash and cash equivalents	$	174,298		$	4,119,298
Other current assets		370,066			370,066
Non-current assets		3,426,559			3,426,559
Total assets	$	3,970,923		$	7,915,923

Derivative warrant liability	$	436,034		$	-
Convertible notes payable		17,024			-
Other current liabilities		1,116,134			1,116,134
Lease liability – long term		513,585			513,585
Total liabilities		2,082,777			1,629,719

Stockholders’ equity:
Common stock		20,857			22,216
Additional paid-in capital		37,885,751			42,282,450
Accumulated deficit		(36,018,462	)		(36,018,462	)
Total stockholders’ equity		1,888,146			6,286,204
Total liabilities and stockholders’ equity	$	3,970,923		$	7,915,923

	Six Months Ended
	June 30, 2017
Discount rate		16	%
Risk free rate		2.48	%
Rate of return		16	%
Sustainable growth rate		5	%
Company survival probability		65	%
Liquidation value	$	0

	·●	~~Expand~~expand the sales and marketing of ~~its~~the VectorVision product line;
	●	develop the TDSI business and operations; and

	Three Months Ended June 31,											Three Months Ended March 31,
	2018			2017			Change					2019			2018			Change
Revenue	$	220,778		$	59,977		$	160,801		268	%	$	242,538		$	193,040		$	49,498		26	%
Cost of goods sold		87,776			29,692			58,084		196	%		93,492			79,278			14,214		18	%
Gross Profit		133,002			30,285			102,717		339	%		149,046			113,762			35,284		31	%
Operating Expenses:
Research and development		34,320			15,530			18,790		121	%		29,028			159,588			(130,560	)	(82	)%
Sales and marketing		378,750			101,598			277,152		273	%		353,537			605,990			(252,453	)	(42	)%
General and administrative		1,034,914			766,894			268,020		35	%		947,974			1,680,810			(732,836	)	(44	)%
Total Operating Expenses		1,447,984			884,022			563,962		64	%		1,330,539			2,446,388			(1,115,849	)	(46	)%
Loss from Operations		(1,314,982	)		(853,737	)		(461,245	)	54	%		(1,181,493	)		(2,332,626	)		1,151,133		(49	)%
Other Expense:
Interest expense		710			1,924			(1,214	)	(63	)%		17,572			835			16,737		2004	%
Fair value of warrants - extension of expiration dates		494,391			-			494,391		-	%
Fair value of warrants													186,034			-			186,034		100	%
Net Loss	$	(1,810,083	)	$	(855,661	)	$	(954,422	)	112	%	$	(1,385,099	)	$	(2,333,461	)	$	948,362		(41	)%

	Six Months Ended June 31,
	2018			2017			Change
Revenue	$	413,818		$	115,912		$	297,906		257	%
Cost of goods sold		167,055			52,326			114,729		219	%
Gross Profit		246,763			63,586			183,177		288	%
Operating Expenses:
Research and development		194,708			25,770			168,938		656	%
Sales and marketing		984,464			178,333			806,131		452	%
General and administrative		2,714,680			1,365,807			1,348,873		99	%
Total Operating Expenses		3,893,852			1,569,910			2,323,942		148	%
Loss from Operations		(3,647,089	)		(1,506,324	)		(2,140,765	)	142	%
Other Expense:
Interest expense		1,545			18,355			(16,810	)	(92	)%
Fair value of warrants - extension of expiration dates		494,391			-			494,391		-	%
Net Loss	$	(4,143,025	)	$	(1,524,679	)	$	(2,618,346	)	172	%

	i.	Medical Foods – Our Medical Foods segment develops, formulates and distributes condition-specific medical foods with an initial medical food product on the market under the brand name Lumega-Z^® that replenishes and restores the macular protective pigment. We have also invented a proprietary technology, embodied in a medical device, the MapcatSF,^®that accurately measures the macular pigment optical density (“MPOD”). Using the MapcatSF to measure the MPOD allows one to monitor the increase in the density of the macular protective pigment after taking Lumega-Z. The Company has also developed a new medical food product, GlaucoCetin^TM, which the Company believes is the first vision-specific medical food designed to support and protect the mitochondrial function of optic nerve cells and improve blood flow in the ophthalmic artery in patients with glaucoma. GlaucoCetin^TM combines a unique set of ingredients, specifically designed to stop or potentially reverse the underlying cause of optic nerve loss, and ultimately vision loss, in patients with glaucoma.

	ii.	Vision Testing Diagnostics – Our Vision Testing Diagnostics segment, under the brand name VectorVision, specializes in the standardization of contrast sensitivity, glare sensitivity, low contrast acuity, and early treatment diabetic retinopathy study (“ETDRS”) visual acuity testing. VectorVision’s standardization system is designed to provide the practitioner or researcher with the ability to delineate very small changes in visual capability, either as compared to the population or from visit to visit. VectorVision develops, manufactures and sells equipment and supplies for standardized vision testing for use by eye doctors in clinical trials, for real-world vision evaluation, and industrial vision testing.

Signature	Title	Date

/s/ Michael Favish	CEO, President and	~~August~~May 10, ~~2018~~2019
Michael Favish	Chairman of the Board (Principal Executive Officer)

/s/ John Townsend	Controller and Chief Accounting Officer	~~August~~May 10, ~~2018~~2019
John Townsend	(Principal Accounting Officer)

Exhibit No.		Description

3.1		Certificate of ~~Elimination~~Amendment to Certificate of ~~Designations, Preferences~~Incorporation filed and ~~Rights~~effective with the Delaware Secretary of ~~Series A and Series B Convertible Preferred Stock~~State on January 30, 2019 (incorporated by reference to Exhibit 3.1 toof the Company’s Current Report on Form 8-K filed with the SEC on ~~May 2, 2018)~~February 1, 2019)
~~31.1~~10.1		Form of Purchase Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on March 21, 2019)
10.2		Form of Debenture (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on March 21, 2019)
10.3		Form of Warrant (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the SEC on March 21, 2019)
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		The following materials from the Company’s Quarterly Report on Form 10-Q for the period ended ~~June~~September 30, 2018, formatted in XBRL (eXtensible Business Reporting Language), (i) Balance Sheets, (ii) Statements of Income, (iii) Statements of Comprehensive Income, (iv) Statements of Cash Flows, (v) Statement of Stockholders’ Equity and (vi) Notes to Financial Statements