10-Q

 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended March 31, 2018

OR

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

For the transition period from ________ to ________

Commission file number 001-32518

 Nuo Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	23-3011702
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

207A Perry Parkway, Suite 1
Gaithersburg, MD 20877

(Address of Principal Executive Offices) (Zip Code)

(240) 499-2680

(Registrant’s Telephone Number, Including Area Code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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). Yes ☒ No ☐

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

Large Accelerated Filer ☐	Accelerated Filer  ☐
Non-accelerated Filer ☐	Smaller Reporting Company ☒   Emerging Growth Company ☐

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

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check make whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.   Yes ☒   No ☐

APPLICABLE ONLY TO CORPORATE ISSUERS

As of May 11, 2018, the number of shares outstanding of the registrant’s common stock, $0.0001 par value, was 22,722,400.

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TABLE OF CONTENTS

NUO THERAPEUTICS, INC.
 
TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	23
Item 4. Controls and Procedures	23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	24
Item 1A. Risk Factors	24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3. Defaults Upon Senior Securities	24
Item 4. Mine Safety Disclosures	24
Item 5. Other Information	24
Item 6. Exhibits	24
Signatures	25
Exhibit Index	26

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PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

NUO THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31, 2018			December 31, 2017
ASSETS
Current assets
Cash and cash equivalents	$	146,935		$	693,515
Accounts and other receivable, net		341,605			114,331
Inventory, net		37,198			35,590
Prepaid expenses and other current assets		238,091			341,671
Total current assets		763,829			1,185,107
Property and equipment, net		193,604			223,616
Deferred costs and other assets		15,316			15,316
Total assets	$	972,749		$	1,424,039
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	536,313		$	380,280
Accrued expenses and liabilities		617,941			556,557
Total current liabilities		1,154,254			936,837
Other liabilities		2,888			4,331
Total liabilities		1,157,142			941,168
Commitments and contingencies (Note 8)
Stockholders' equity (deficit)
Preferred stock; $0.0001 par value, 1,000,000 authorized, 29,038 issued and outstanding; liquidation value of $29,038,000		3			3
Common stock; $0.0001 par value, 31,500,000 authorized, 22,722,400 issued and outstanding		2,272			2,272
Additional paid-in capital		21,158,387			21,155,404
Accumulated deficit		(21,345,055	)		(20,674,808	)
Total stockholders' equity (deficit)		(184,393	)		482,871
Total liabilities and stockholders' equity (deficit)	$	972,749		$	1,424,039

The accompanying notes are an integral part of these consolidated financial statements.

1

NUO THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months ended March 31, 2018			Three Months ended March 31, 2017
Revenue
Product sales	$	124,910		$	113,082
Royalties		35,033			59,661
Total revenue		159,943			172,743
Costs of revenue
Costs of sales		49,004			270,087
Total costs of revenue		49,004			270,087
Gross profit (loss)		110,939			(97,344	)
Operating expenses
Sales and marketing		61,123			213,700
Research and development		258,035			399,414
General and administrative		459,507			974,413
Total operating expenses		778,665			1,587,527
Loss from operations		(667,726	)		(1,684,871	)
Other income (expense)
Interest, net		44			(6,579	)
Other		(2,565	)		(1,150	)
Total other expense		(2,521	)		(7,729	)
Net loss	$	(670,247	)	$	(1,692,600	)
Loss per common share
Basic	$	(0.03	)	$	(0.17	)
Diluted	$	(0.03	)	$	(0.17	)
Weighted average common shares outstanding
Basic		22,722,400			9,927,112
Diluted		22,722,400			9,927,112

 The accompanying notes are an integral part of these consolidated financial statements.

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NUO THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months ended March 31, 2018			Three Months ended March 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(670,247	)	$	(1,692,600	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		26,084			310,045
Stock-based compensation		2,983			15,808
Bad debt (recovery) expense		(239,660	)		466
Increase in allowance for inventory obsolescence		949			915
Loss (gain) on the disposal of fixed assets		3,928			(1,205	)
Change in operating assets and liabilities:
Accounts and other receivable		12,386			56,222
Inventory		(2,557	)		4,317
Prepaid expenses and other current assets		103,580			(47,773	)
Other assets		-			30,208
Accounts payable		156,033			(14,267	)
Accrued expenses and liabilities		61,384			75,369
Other liabilities		(1,443	)		(19,756	)
Net cash used in operating activities		(546,580	)		(1,282,251	)
Net decrease in cash, cash equivalents and restricted cash		(546,580	)		(1,282,251	)
Cash, cash equivalents and restricted cash, beginning of period		693,515			2,673,526
Cash, cash equivalents and restricted cash, end of period	$	146,935		$	1,391,275
Supplemental cash flow information
Interest expense paid in cash	$	-		$	665
Income taxes paid in cash	$	-		$	-

The accompanying notes are an integral part of these consolidated financial statements.

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NUO THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Description of Business and Bankruptcy Proceedings

Description of Business

Nuo Therapeutics, Inc. (“Nuo Therapeutics,” the “Company,” “we,” “us,” or “our”) is a biomedical company marketing its products primarily within the U.S. We commercialize innovative cell-based technologies that harness the regenerative capacity of the human body to trigger natural healing. The use of autologous (from self) biological therapies for tissue repair and regeneration is part of a transformative clinical strategy designed to improve long term recovery in complex chronic conditions with significant unmet medical needs. Growth opportunities for the Aurix System in the United States in the near to intermediate term include the treatment of chronic wounds with Aurix in: (i) the Medicare population under a National Coverage Determination (“NCD”), when registry data is collected under the Coverage with Evidence Development (“CED”) program of the Centers for Medicare & Medicaid Services (“CMS”); and (ii) the Veterans Affairs (“VA”) healthcare system and other federal accounts settings.

As of March 31, 2018, our commercial offering consists solely of the Aurix point of care technology for the safe and efficient separation of autologous blood to produce a platelet based therapy for the chronic wound care market. Prior to May 5, 2016 (the “Effective Date”), the effective date of the Company’s emergence from bankruptcy under a confirmed Plan of Reorganization (See Note 6), we had two distinct platelet rich plasma (“PRP”) devices: the Aurix^® System for wound care, and the Angel^® concentrated Platelet Rich Plasma (“cPRP”) System for orthopedics markets. Prior to the Effective Date, Arthrex, Inc. (“Arthrex”) was our exclusive distributor for Angel. Pursuant to the Plan of Reorganization, on May 5, 2016, the Company assigned its rights, title and interest in and to its existing license agreement with Arthrex to Deerfield Management Company, L.P. and its affiliates (“Deerfield”), as well as rights to collect royalty payments thereunder.

Note 2 – Liquidity and Summary of Significant Accounting Principles

Liquidity

Our operations are subject to certain risks and uncertainties including, among others, current and potential competitors with greater resources, dependence on significant customers, lack of operating history, uncertainty of future profitability and possible fluctuations in financial results. Since our inception, we have financed our operations by raising debt, issuing equity and equity-linked instruments, and executing licensing arrangements, and to a lesser extent by generating royalties and product revenues. We have incurred, and continue to incur, recurring losses and negative cash flows. During the quarter ended September 30, 2017, we withdrew our attempted registered offering and related refinancing of our Series A preferred stock, and exercised our rights under the Backstop Commitment in full.  As a result of that exercise, we issued an aggregate of 12,800,000 shares of common stock (the "Backstop Shares") for gross proceeds of approximately $3.0 million, which more than doubled the number of our outstanding shares of common stock. At March 31, 2018, we had cash and cash equivalents on hand of approximately $147,000 and had no outstanding debt.

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. The propriety of using the going-concern basis is dependent upon, among other things, the achievement of future profitable operations, the ability to generate sufficient cash from operations, and potential other funding sources, including cash on hand, to meet our obligations as they become due.

We believe based on the operating cash requirements and capital expenditures expected for the next twelve months, that our current resources, projected revenue from sales of Aurix, and limited license fees and royalties from our license of certain aspects of the ALDH technology, are insufficient to support our operations beyond the next 30 days.  As such, we believe that substantial doubt about our ability to continue as a going concern exists.

We require additional capital and seek to continue financing our operations with external capital for the foreseeable future.   Any equity financings may cause further substantial dilution to our stockholders and could involve the issuance of securities with rights senior to the common stock. Any allowed debt financings (which are restricted under the terms of the Certificate of Designations for our Series A Preferred Stock) may require us to comply with onerous financial covenants and restrict our business operations. Our ability to complete additional financings is dependent on, among other things, the state of the capital markets at the time of any proposed equity or debt offering, state of the credit markets at the time of any proposed loan financing, market reception of the Company and perceived likelihood of success of our business model, and on the relevant transaction terms, among other things. We may not be able to obtain additional capital as required to finance our efforts, through asset sales, equity or debt financings, or any combination thereof, on satisfactory terms or at all. Additionally, any such financing, if at all obtained, may not be adequate to meet our capital needs and to support our operations.

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If we are unable to secure sufficient capital to fund our operating activities or we are unable to increase revenues significantly, we may be forced to delay the completion of, or significantly reduce the scope of, our current business plan, including our plan to penetrate the market serving Medicare beneficiaries and fulfill the related data gathering requirements as stipulated by the Medicare CED coverage determination, delay the pursuit of commercial insurance reimbursement for our wound treatment technologies, and postpone the hiring of new personnel.   Moreover, if we are unable within the next 30 days to secure sufficient capital to fund our ongoing operating activities, we will likely be required to cease operations.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). In our opinion, the accompanying unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly our financial position, results of operations and cash flows. The consolidated balance sheet at December 31, 2017, has been derived from audited financial statements of the Company as of that date. The interim unaudited consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules and regulations prescribed by the SEC. We believe that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited interim consolidated financial statements are read in conjunction with the audited financial statements and notes previously included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned and controlled subsidiary Aldagen, Inc. (“Aldagen”). All significant inter-company accounts and transactions are eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, allowance for inventory obsolescence, allowance for doubtful accounts, contingent liabilities, fair value and depreciable lives of long-lived assets (including property and equipment, intangible assets and goodwill), deferred taxes and associated valuation allowance and the classification of our long-term debt. Actual results could differ from those estimates.

Credit Concentration

We generate accounts receivable from the sale of our products. In addition, other receivables consist primarily of a settlement amount for a prior value added tax receivable due from the contract manufacturer of the prior Angel product line and receivable for royalties due for sales of Aldeflour. Customers or other receivables balances in excess of 10% of total receivables at March 31, 2018 and December 31, 2017 were as follows:

	March 31, 2018		December 31, 2017
Customer A		70%		72%
Customer B		10%		12%

Revenue from significant customers exceeding 10% of total revenues for the periods presented was as follows:

	Three Months ended March 31, 2018		Three Months ended March 31, 2017
Customer B		22%		35%
Customer C		14%		-

Historically, we used single suppliers for several components of the Aurix product line. We outsource the manufacturing of various products to contract manufacturers. While we believe these manufacturers demonstrate competency, reliability and stability, there is no assurance that one or more of them will not experience an interruption or inability to provide us with the products needed to satisfy customer demand. Additionally, while most of the components of Aurix are generally readily available on the open market, a reagent, bovine thrombin, is available exclusively through Pfizer, with whom we have an established vendor relationship.

5

Cash Equivalents

We consider all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. We maintain our cash and cash equivalents in the form of money market deposit accounts and qualifying money market funds, and checking accounts with financial institutions that we believe are credit worthy.

Accounts Receivables

We generate accounts receivables from the sale of our products. We provide for an allowance against receivables for estimated losses that may result from a customer’s inability or unwillingness to pay. The allowance for doubtful accounts is estimated primarily based upon historical write-off percentages, known problem accounts, and current economic conditions. Accounts are written off against the allowance for doubtful accounts when we determine that amounts are not collectable. Recoveries of previously written-off accounts are recorded when collected. At March 31, 2018, we maintained an allowance for doubtful accounts of approximately $2,000. At December 31, 2017, we maintained an allowance for doubtful accounts of approximately $306,000 as we fully reserved for the value added tax receivable. Effective with an executed settlement agreement as of March 29, 2018, we recognized a bad debt recovery of approximately $240,000 and received the settlement amount on April 9, 2018.

Inventory

Our inventory is produced by third-party manufacturers and consists of raw materials and finished goods. Inventory cost is determined on a first-in, first-out basis and is stated at the lower of cost or net realizable value. We maintain an inventory of kits, reagents, and other disposables that have shelf-lives that generally range from 18 months to two years.

As of March 31, 2018, our inventory consisted of approximately $32,000 of finished goods and $29,000 of raw materials. As of December 31, 2017, our inventory consisted of approximately $40,000 of finished goods and $18,000 of raw materials.

We provide for an allowance against inventory for estimated losses that may result in excess and obsolete inventory (i.e., from the expiration of products). Our allowance for expired inventory is estimated based upon the inventory’s remaining shelf-life and our anticipated ability to sell such inventory, which is estimated using historical usage and future forecasts, within its remaining shelf life. At March 31, 2018 and December 31, 2017, the Company maintained an allowance for expired and excess and obsolete inventory of approximately $24,000 and $23,000, respectively. Expired products are segregated and used for demonstration purposes only; the Company records the associated expense for this reserve to cost of sales in the consolidated statements of operations.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and is depreciated, using the straight-line method, over its estimated useful life ranging from one to six years. Upon emergence from bankruptcy, property and equipment remaining lives were estimated based on the estimated remaining useful lives of the assets. Leasehold improvements are amortized, using the straight-line method, over the lesser of the expected lease term or its estimated useful life ranging from one to three years. Amortization of leasehold improvements is included in depreciation expense. Maintenance and repairs are charged to operations as incurred. When assets are disposed of, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in other income (expense).

Centrifuges may be sold or placed at no charge with customers. Depreciation expense for centrifuges that are available for sale or placed at no charge with customers are charged to cost of sales. Depreciation expense for centrifuges used for sales and marketing and other internal purposes are charged to general and administrative expenses.

Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. Recoverability measurement and estimating of undiscounted cash flows is done at the lowest possible level for which we can identify assets. If such assets are considered to be impaired, impairment is recognized as the amount by which the carrying amount of assets exceeds the fair value of the assets.

Revenue Recognition

Prior to January 1, 2018, revenues were recognized when the four basic criteria for recognition were met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) consideration is fixed or determinable; and (4) collectability is reasonably assured. The Company adopted new accounting guidance for revenue recognition effective January 1, 2018 which did not have a material impact on the Company’s financial statements.

Beginning January 1, 2018, the Company analyzes contracts to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers; (ii) identification of distinct performance obligations in the contract; (iii) determination of contract transaction price; (iv) allocation of contract transaction price to the performance obligations; and (v) determination of revenue recognition based on timing of satisfaction of the performance obligation. The Company recognizes revenues upon the satisfaction of its performance obligations (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.

6

We provide for the sale of our products, including disposable processing sets and supplies to customers. Revenue from the sale of products is recognized upon shipment of products to the customers. We do not maintain a reserve for returned products, as in the past those returns have not been material and are not expected to be material in the future. Percentage-based fees on licensee sales of covered products are generally recorded as products are sold by licensees, and are reflected as royalties in the consolidated statements of operations. Direct costs associated with product sales and royalty revenues are recorded at the time that revenue is recognized.

License Agreement with Rohto

The Company’s license agreement with Rohto (See Note 4 – Distribution, Licensing and Collaboration Arrangements) contains multiple promises that include the delivery of a “functional” license and other ancillary activities such as maintaining its intellectual property and providing regulatory support and training to Rohto. The Company has determined that the ancillary activities do not constitute distinct promises and, accordingly, the Company combined the ancillary activities with the delivered license as a single performance obligation.  The Company recognized the total non-contingent transaction price of $3.0 million as revenue when the functional license was delivered to Rohto.  Other contingent elements of transaction price, such as contingent fees and sales-based royalties related to the supply and future sale of the product, will be recognized as revenue when the contingencies are satisfied. 

Segments and Geographic Information

Approximately 30% and 35% of our total revenue was generated outside of the United States for the three months ended March 31, 2018 and 2017, respectively.

Stock-Based Compensation

Prior to the Effective Date, the Company, from time to time, issued stock options or stock awards to employees, directors, consultants, and other service providers under its 2002 Long-Term Incentive Plan (“LTIP”) or 2013 Equity Incentive Plan (“EIP” and, together with the LTIP, the “Incentive Plans”). In some cases, it had issued compensatory warrants to service providers outside the Incentive Plans (See Note 6 – Equity and Stock-Based Compensation).

In July 2016, the Board of Directors approved, and in August 2016 it amended, the Company’s 2016 Omnibus Incentive Compensation Plan (the “2016 Omnibus Plan”). As of November 21, 2016, the Majority Stockholders executed a written consent adopting and approving the 2016 Omnibus Plan, as amended and restated, which provides for the Company to grant equity and cash incentive awards to officers, directors and employees of, and consultants to, the Company and its subsidiaries. There were no options granted during the three months ended March 31, 2018. 22,500 stock options were granted during the three months ended March 31, 2017.

The fair value of employee stock options is measured at the date of grant. Expected volatilities for the 2016 Omnibus Plan options are based on the equally weighted average historical volatility from five comparable public companies with an expected term consistent with ours. Expected years until exercise represents the period of time that options are expected to be outstanding. Under the Incentive Plans, expected volatilities were based on historical volatility of the Company’s stock, and Company data was utilized to estimate option exercises and employee terminations within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company estimated that the dividend rate on its common stock will be zero.  

Stock-based compensation for awards granted to non-employees is periodically re-measured as the underlying awards vest. The Company recognizes an expense for such awards throughout the performance period as the services are provided by the non-employees, based on the fair value of these options and warrants at each reporting period. The fair value of stock options and compensatory warrants issued to service providers utilizes the same methodology with the exception of the expected term. For awards to non-employees, the Company estimates that the options or warrants will be held for the full term.

The Company adopted new accounting guidance on January 1, 2017 related to stock-based compensation arrangements. Under the new guidance, excess tax benefits and tax deficiencies related to stock-based compensation awards are recognized as income tax expenses or benefits in the income statement, and excess tax benefits are classified along with other income tax cash flows in the operating activities section of the condensed consolidated statement of cash flows. Additionally, the Company elected to account for forfeitures of stock-based awards as they occur, as opposed to estimating those prior to their occurrence. The adoption of this new guidance did not have a material impact on the Company's consolidated financial statements in any period.

7

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, current income tax expense or benefit is the amount of income taxes expected to be payable or refundable for the current year. A deferred income tax asset or liability is recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax rate changes are reflected in income during the period such changes are enacted. All of our tax years remain subject to examination by the tax authorities.

The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income before taxes. There were no such items in 2018 and 2017.

Basic and Diluted Earnings (Loss) per Share

Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding (including contingently issuable shares when the contingencies have been resolved) during the period.

For periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all dilutive potential common shares is anti-dilutive. For periods of net income, and when the effects are not anti-dilutive, diluted earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of shares outstanding (including contingently issuable shares when the contingencies have been resolved) plus the impact of all potential dilutive common shares, consisting primarily of common stock options and stock purchase warrants using the treasury stock method, and convertible debt using the if-converted method. 

All of the Company’s outstanding stock options and warrants were considered anti-dilutive for the three months ended March 31, 2018 and 2017. The total number of anti-dilutive shares underlying common stock options and warrants exercisable for common stock, which have been excluded from the computation of diluted loss per share for the periods presented, was as follows:

	Three months ended March 31, 2018		Three months ended March 31, 2017
Shares underlying:
Common stock options		742,084		1,225,833
Stock purchase warrants		6,180,000		6,180,000

Reclassifications

Certain reclassification have been made to the prior year financial statements to conform to the current year presentation, including the addition of restricted cash to cash and cash equivalents on the consolidated statements of cash flows as a result of the adoption of new accounting guidance.

Recently Adopted Accounting Pronouncements

As previously discussed, the Company adopted new accounting guidance for revenue recognition effective January 1, 2018 which did not have a material impact on the Company's financial statements.

In July 2015, the FASB issued guidance for the accounting for inventory. The main provisions are that an entity should measure inventory within the scope of this update at the lower of cost and net realizable value, except when inventory is measured using LIFO or the retail inventory method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. In addition, the Board has amended some of the other guidance in Topic 330 to more clearly articulate the requirements for the measurement and disclosure of inventory. The amendments in this update for public business entities are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The amendments in this update should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We adopted this pronouncement effective January 1, 2017; the adoption did not have a material impact to our consolidated financial statements.

In November 2015, the FASB issued accounting guidance to simplify the presentation of deferred taxes. Previously, U.S. GAAP required an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts. Under this guidance, deferred tax liabilities and assets will be classified as noncurrent amounts. The standard is effective for reporting periods beginning after December 15, 2016. We adopted this pronouncement effective January 1, 2017; the adoption did not have a material impact to our consolidated financial statements.

8

In November 2016, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) amending the presentation of restricted cash within the consolidated statements of cash flows. The new guidance requires that restricted cash be added to cash and cash equivalents on the consolidated statements of cash flows. The Company adopted this ASU on January 1, 2018 on a retrospective basis with the following impacts to our consolidated statements of cash flows for the three months ended March 31, 2017:

	Previously Reported			Adjustment		As Revised
Net cash used in investing activities	$	(13	)	$	13	$	-

In January 2017, the FASB issued guidance intended to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the existing guidance, in computing the implied fair value of goodwill under Step 2, an entity is required to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities), following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under the new guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The guidance also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity is required to adopt the new guidance on a prospective basis. The new guidance is effective for the Company for its annual or any interim goodwill impairment tests for fiscal years beginning after December 15, 2021. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this pronouncement effective January 1, 2017; the adoption did not have a material impact to our consolidated financial statements upon adoption since goodwill was not considered impaired with the adoption of Accounting Standards Update 2017-04. However, when we performed our interim goodwill impairment test, comparing the fair value of our one reporting unit with its carrying amount as of June 30, 2017, the carrying amount exceeded our reporting unit's fair value by approximately $2.8 million. As a result we recognized a non-cash goodwill impairment charge of approximately $2.1 million to write-down goodwill to its estimated fair value of zero as of June 30, 2017.

Unadopted Accounting Pronouncements

In February 2016, the FASB issued guidance for accounting for leases. The guidance requires lessees to recognize assets and liabilities related to long-term leases on the balance sheet and expands disclosure requirements regarding leasing arrangements. The guidance is effective for reporting periods beginning after December 15, 2018 and early adoption is permitted. The guidance must be adopted on a modified retrospective basis and provides for certain practical expedients. We are currently evaluating the impact that this guidance will have on our consolidated financial statements.

We have evaluated all other issued and unadopted Accounting Standards Updates and believe the adoption of these standards will not have a material impact on our results of operations, financial position, or cash flows.

Note 3 – Distribution, Licensing and Collaboration Arrangements

Distribution and License Agreement with Rohto

In January 2015, we granted to Rohto Pharmaceutical Co., Ltd. (“Rohto”) a royalty bearing, nontransferable, exclusive license, with limited right to sublicense, to use certain of the Company’s intellectual property for the development, import, use, manufacturing, marketing, sale and distribution for all wound care and topical dermatology applications of the Aurix System and related intellectual property and know-how in human and veterinary medicine in Japan in exchange for an upfront payment from Rohto of $3.0 million. The agreement also contemplates additional royalty payments based on the net sales of Aurix in Japan and an additional future cash payment if and when the reimbursement price for the national health insurance system in Japan has been achieved after marketing authorization as described below. In connection with and effective as of the entering into the Rohto Agreement, we amended an existing licensing and distribution agreement with Millennia Holdings, Inc. (“Millennia”) to terminate it and allow us to transfer the exclusivity rights from Millennia to Rohto. In connection with this amendment we paid a one-time, non-refundable fee of $1.5 million to Millennia upon our receipt of the $3.0 million upfront payment from Rohto, and we may be required to make certain future payments to Millennia if we receive the milestone payment from Rohto as well as future royalty payments based upon net sales in Japan. Rohto has assumed all responsibility for securing the marketing authorization in Japan, while we will provide relevant product information, as well as clinical and other data, to support Rohto’s efforts. 

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Collaboration Agreement with Restorix Health

On March 22, 2016, we entered into a Collaboration Agreement (the “Collaboration Agreement”) with Restorix Health (“Restorix”), pursuant to which we agreed to provide Restorix with certain limited geographic exclusivity benefits over a defined period of time for the usage of the Aurix System in up to 30 of the approximately 200 hospital outpatient wound care clinics with which Restorix has a management contract (the “RXH Partner Hospitals”), in exchange for Restorix making minimum commitments of patients enrolled in three prospective clinical research studies primarily consisting of patient data collection (the “Protocols”) necessary to maintain exclusivity under the Collaboration Agreement. The initial period under the Collaboration Agreement expired in March 2018 and remains subject to extension with the mutual consent of the parties.

Pursuant to the Collaboration Agreement, the Company agreed to provide: (i) clinical support services by its clinical staff as reasonably agreed between the Company and Restorix as necessary and appropriate, (ii) reasonable and necessary support regarding certain reimbursement activities, (iii) coverage of Institutional Review Board (“IRB”) fees and payment to Restorix for certain training costs subject to certain limitations and (iv) community-focused public relations materials for participating RXH Partner Hospitals to promote the use of Aurix and participation in the Protocols. Pursuant to the Collaboration Agreement, Restorix agreed to: (i) provide access and support as reasonably necessary and appropriate at up to 30 RXH Partner Hospitals to identify and enroll patients into the Protocols, including senior executive level support and leadership to the collaboration and its enrollment goals and (ii) reasonably assist the Company to correct through a query process, any patient data submitted having incomplete or inaccurate data fields. 

Subject to the satisfaction of certain conditions, during the term of the Collaboration Agreement: (i) Restorix will have site specific geographic exclusivity for usage of Aurix in connection with treatment of patients in the Protocols within a 30 mile radius of each RXH Partner Hospital, and (ii) other than with respect to existing CED sites, the Company will not provide corporate exclusivity with any other wound management company operating in excess of 19 wound care facilities for any similar arrangement.

Under the Collaboration Agreement, the Company will pay Restorix or the RXH Partner Hospital, as the case may be, a per patient data collection (administrative) fee upon full completion and delivery of a patient data set. In addition, the Company is responsible to pay for any IRB fees necessary to conduct the Protocols and enroll patients, and to pay Restorix a training cost stipend per site. Each RXH Partner Hospital will pay the Company the then-current product price ($700 in 2018) as set forth in the Collaboration Agreement.

Boyalife Distribution Agreement

Effective as of May 5, 2016, the Company and Boyalife Hong Kong Ltd. (“Boyalife”), an entity affiliated with the Company’s significant shareholder, Boyalife Investment Fund I, Inc., entered into an Exclusive License and Distribution Agreement (the “Boyalife Distribution Agreement”) with an initial term of five years, unless the agreement is terminated earlier in accordance with its terms.  Under this agreement, Boyalife received a non-transferable, exclusive license, with limited right to sublicense, to use certain of the Company’s intellectual property relating to its Aurix System for the purposes and in the territory specified below.  Under the agreement, Boyalife is entitled to import, use for development, promote, market, sell and distribute the Aurix Products in greater China (China, Hong Kong, Taiwan and Macau) for all regenerative medicine applications, including but not limited to wound care and topical dermatology applications in human and veterinary medicine.  “Aurix Products” are defined as the combination of devices to produce a wound dressing from the patient’s blood - as of May 5, 2016 consisting of centrifuge, wound dressing kit and reagent kit.  Under the Boyalife Distribution Agreement, Boyalife is obligated to pay the Company (a) $500,000 within 90 days of approval of the Aurix Products by the China Food and Drug Administration (“CFDA”), but no earlier than December 31, 2018, and (b) a distribution fee per wound dressing kit and reagent kit of $40, payable quarterly, subject to an agreement by the parties to discuss in good faith the appropriate distribution fee if the pricing of such kits exceeds the current general pricing in greater China.   Under the agreement, Boyalife is entitled, with the Company’s approval (not to be unreasonably withheld or delayed) to procure devices from a third party in order to assemble them with devices supplied by the Company to make the Aurix Products.  Boyalife also has a right of first refusal with respect to the Aurix Products in specified countries in the Asia Pacific region excluding Japan and India, exercisable in exchange for a payment of no greater than $250,000 in the aggregate.  If Boyalife files a new patent application for a new invention relating to wound dressings, the Aurix Products or the Company’s technology, Boyalife will grant the Company a free, non-exclusive license to use such patent application outside greater China during the term of the Boyalife Distribution Agreement.

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Note 4 – Receivables

Accounts and other receivables, net consisted of the following:

	March 31, 2018			December 31, 2017
Trade receivables	$	68,285		$	64,387
Other receivables		275,295			355,839
		343,580			420,226
Less allowance for doubtful accounts		(1,975	)		(305,895	)
Accounts and other receivables, net	$	341,605		$	114,331

Other receivables at March 31, 2018 and December 31, 2017 primarily consisted of an agreed settlement amount on the prior value added tax receivable due from the contract manufacturer of the former Angel product line which was received on April 9, 2018 and a quarter end royalty payable for the Aldeflour product. The allowance for doubtful accounts at March 31, 2018 of approximately $2,000 reflects the estimated reserve for trade receivables and the December 31, 2017 allowance reflects a full reserve against the value added tax receivable. A bad debt recovery of approximately $240,000 was recognized concurrent with the execution of the settlement agreement in the three months ended March 31, 2018.

Note 5 – Property and Equipment

Property and equipment, net consisted of the following:

	March 31, 2018			December 31, 2017
Medical equipment	$	396,818		$	401,719
Office equipment		38,104			48,888
Software		257,619			257,619
Manufacturing equipment		34,899			34,899
Leasehold improvements		19,215			19,215
		746,655			762,340
Less accumulated depreciation and amortization		(553,051	)		(538,724	)
Property and equipment, net	$	193,604		$	223,616

Depreciation expense of property and equipment was approximately $26,000 and $97,000 for the three months ended March 31, 2018 and 2017, respectively.

Note 6 – Equity and Stock-Based Compensation

Under the Second Amended and Restated Certificate of Incorporation of the Company, it has the authority to issue a total of 32,500,000 shares of capital stock, consisting of: (i) 31,500,000 shares of common stock and 1,000,000 shares of preferred stock, par value $0.0001 per share, which will have such rights, powers and preferences as the board of directors of the Company (the “Board of Directors”) shall determine.

Series A Preferred Stock

On May 5, 2016 (the “Effective Date”), the effective date of the Company’s emergence from bankruptcy under a confirmed Plan of Reorganization (the “Plan”), the Company filed a Certificate of Designations of Series A Preferred Stock with the Delaware Secretary of State, designating 29,038 shares of the Company’s undesignated preferred stock, par value $0.0001 per share, as Series A Preferred Stock (the “Series A Preferred Stock”). On the Effective Date, the Company issued 29,038 shares of Series A Preferred Stock to Deerfield in accordance with the Plan pursuant to the exemption from the registration requirements of the Securities Act provided by Section 1145 of the Bankruptcy Code. Deerfield did not receive any shares of common stock or other equity interests in the Company.

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The Series A Preferred Stock has no stated maturity date, is not convertible or redeemable, and carries a liquidation preference of $29,038,000, which is required to be paid to holders of such Series A Preferred Stock before any payments are made with respect to shares of common stock (and other capital stock that is not issued on parity or senior to the Series A Preferred Stock) upon a liquidation or change in control transaction.  For so long as Series A Preferred Stock is outstanding, the holders of Series A Preferred Stock have the right to nominate and elect one member of the Board of Directors.   The Series A Preferred Stock has voting rights, voting with the common stock as a single class, with each share of Series A Preferred Stock having the right to five votes, which currently represents approximately one percent (1%) of the voting rights of the capital stock of the Company.  The holders of Series A Preferred Stock have the right to approve certain transactions and incurrences of debt. Among other restrictions, the Certificate of Designations for our Series A Preferred Stock limits the Company’s ability to (i) issue securities that are senior or pari passu with the Series A Preferred Stock, (ii) incur debt other than for working capital purposes not in excess of $3.0 million, (iii) issue securities that are junior to the Series A Preferred Stock and that provide certain consent rights to the holders of such junior securities in connection with a liquidation or contain certain liquidation preferences, (iv) pay dividends on or purchase shares of its capital stock, and (v) change the authorized number of members of its Board of Directors to a number other than five, in each case without the consent of holders representing at least two-thirds of the outstanding shares of Series A Preferred Stock. The Series A Preferred Stock is classified in equity.

Stock Purchase Warrants

As part of the Plan, the Company also issued Warrants to purchase 6,180,000 shares of unregistered common stock to certain investors participating in the recapitalization of the Company. The Warrants terminate on May 5, 2021 and are currently exercisable at exercise prices ranging from $0.50 per share to $0.75 per share.  The number of shares of common stock underlying a Warrant and its exercise price are subject to customary adjustments upon subdivisions, combinations, payment of stock dividends, reclassifications, reorganizations and consolidations. The Warrants are classified in equity. 

Stock-Based Compensation

In July 2016, the Board of Directors approved, and on August 4, 2016, the Board amended, the Company’s 2016 Omnibus Incentive Plan (the “2016 Omnibus Plan”) to include an evergreen provision, intended to increase the maximum number of shares issuable under the Omnibus Plan on the first day of each fiscal year (starting on January 1, 2017) by an amount equal to six percent (6%) of the shares reserved as of the last day of the preceding fiscal year, provided that the aggregate number of all such increases may not exceed 1,000,000 shares. As of November 21, 2016, the Majority Stockholders executed a written consent adopting and approving the 2016 Omnibus Plan, as amended and restated, which provides for the Company to grant equity and cash incentive awards to officers, directors and employees of, and consultants to, the Company and its subsidiaries. We were authorized to issue up to 1,685,400 shares of common stock under the 2016 Omnibus Plan as of March 31, 2018. 

A summary of stock option activity under the 2016 Omnibus Plan during the three months ended March 31, 2018 is presented below: 

Stock Options – 2016 Omnibus Plan	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2018		861,250		$	1.04		8.57	$	-
Granted		-			-		-	$	-
Exercised		-			-
Forfeited or expired		(119,166	)	$	1.31		-	$	-
Outstanding at March 31, 2018		742,084		$	1.00		6.56	$	-
Exercisable at March 31, 2018		660,418		$	1.00		6.34	$	-

There were no stock options granted under the 2016 Omnibus Plan during the three months ended March 31, 2018. The fair value of stock options vested during the three months ended March 31, 2018 was zero. No stock options were exercised during the three months ended March 31, 2018. As of March 31, 2018, there was approximately $10,000 of total unrecognized compensation cost related to non-vested stock options, and that cost was expected to be recognized over a weighted-average period of 0.94 years. 

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The Company recorded stock-based compensation expense in the periods presented as follows:

	Three Months ended March 31, 2018		Three Months ended March 31, 2017
Sales and marketing	$	-	$	1,122
Research and development		1,324		3,111
General and administrative		1,659		11,575
	$	2,983	$	15,808

Note 7 – Fair Value Measurements

Financial Instruments Carried at Cost

Short-term financial instruments in our condensed consolidated balance sheets, including cash and cash equivalents other than money market funds (which are carried at fair value), accounts, and other receivables and accounts payable, are carried at cost which approximates fair value, due to their short-term nature.

Fair Value Measurements

Our condensed consolidated balance sheets include certain financial instruments that are carried at fair value. Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These tiers include:

●	Level 1,	defined as observable inputs such as quoted prices in active markets for identical assets;
●	Level 2,	defined as observable inputs other than Level 1 prices such as quoted prices for similar assets; quoted  prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
●	Level 3,	defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, we perform a detailed analysis of our assets and liabilities that are measured at fair value. All assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently, and therefore have little or no price transparency are classified as Level 3.

Financial Assets and Liabilities Measured at Fair Value

The Company had no financial assets and liabilities measured at fair value on a recurring or non-recurring basis as of March 31, 2018 or December 31, 2017. 

Non-Financial Assets and Liabilities Measured at Fair Value

The Company’s property and equipment are measured at fair value on a non-recurring basis, upon establishment pursuant to fresh start accounting.

Note 8 – Commitments and Contingencies

As of the Effective Date, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with certain accredited investors who acquired common shares in accordance with the Plan of Reorganization (the “Recapitalization Investors”).  The Registration Rights Agreement provides certain resale registration rights to the Recapitalization Investors with respect to the common shares they received.  Pursuant to the Registration Rights Agreement, the Company filed, and has to update periodically, a registration statement with the U.S. Securities and Exchange Commission that covers the resale of all shares of common stock issued to the Investors on the Effective Date until such time as such shares have been sold or may be sold without registration or restriction pursuant to Rule 144 under the Securities Act, subject to the Company's ability to suspend sales under the registration statement in certain circumstances. As the Company does not qualify for forward incorporation by reference, the Company has caused the suspension of sales under the registration statement pending the filing and effectiveness of a post-effective amendment containing updated financial information.

Our primary office and warehouse facilities are located in Gaithersburg, Maryland, and comprise approximately 12,000 square feet. The facilities fall under two leases with monthly rent, including our share of certain annual operating costs and taxes, at approximately $18,000 in total per month and expiring in September 2019. In addition, we subleased an approximately 2,100 square foot facility in Nashville, Tennessee, which was utilized as a commercial operations office. The sublease was approximately $4,000 per month excluding our share of annual operating expenses, and was due to expire April 30, 2018. Effective January 28, 2018, we executed a sublease termination agreement which terminated our obligations remaining on the sublease in exchange for our forfeiture of the approximately $4,000 security deposit on the sublease. We also lease a 16,300 square foot facility located in Durham, North Carolina. Monthly rent, including our share of certain annual operating costs and taxes, is approximately $22,000 per month and the lease expires on December 31, 2018. As a result of our discontinuance of the ALD-401 clinical trial, the Company ceased use of the facility in Durham, North Carolina on July 31, 2014, and sublet the facility beginning August 1, 2014. The sublease rent is approximately $14,000 per month and also expires December 31, 2018. Due to non-payment on the lease subsequent to December 31, 2017, we have been declared in default on the lease.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial condition and results of operations of Nuo Therapeutics, Inc. ("Nuo Therapeutics," the "Company," "we," "us," or "our") should be read in conjunction with the financial statements and related notes appearing elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2017 (the “Annual Report”), filed with the U.S. Securities and Exchange Commission, or the Commission. 

Special Note Regarding Forward Looking Statements

Some of the information in this Quarterly Report (including this section) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “the facts suggest,” “will,” “will be,” “will continue,” “will likely result,” “could,” “may” and words of similar import. These statements reflect the Company’s current view of future events and are subject to certain risks and uncertainties as noted in this Quarterly Report and in other reports filed by us with the Securities and Exchange Commission, including Forms 8-K, 10-Q, and 10-K. These risks and uncertainties include, among others, the following:

● the continuing rapid depletion of our cash resources, our need for immediate and substantial additional financing (without which we face liquidation) and our ability to obtain that financing, including in light of our unsuccessful registered offering and refinancing of our Series A preferred stock in 2017 and the low share price and significant volatility with respect to our common stock - if we were required to liquidate today, the holders of our common stock would not receive any consideration for their common stock;

● our limited sources of working capital, the fact that Aurix currently represents our sole revenue-generating product, and continuing challenges with meaningfully increasing the level of enrollment in our Coverage with Evidence Development, or CED, program;

● whether the Centers for Medicare & Medicaid Services, or CMS, will establish a standard national payment rate for physicians for the use of Aurix that provides an adequate payment to physicians to increase such use sufficiently;

● our history of losses and expectation that, even if we were to obtain sufficient financing immediately to continue operating, we will incur losses in the foreseeable future;

● our limited operating experience;

● satisfactory completion of the CED program;

● acceptance of our products by the medical community and patients, especially in light of uncertainties surrounding CED programs in general;

● our ability to obtain adequate reimbursement from third-party payors;

● whether the advisory opinion issued in response to a petition to the Office of Inspector General, or OIG, of the Department of Health and Human Services, or DHHS, effectively permitting the petitioning hospital to reduce or waive Medicare patients’ 20% co-payment with respect to the Aurix CED program in certain cases, will in fact cause other healthcare providers to make similar waivers;

● our and Restorix Health, Inc.’s, or Restorix’, successful implementation of our Collaboration Agreement;

● whether CMS will continue to consider their treatment of the geometric mean cost of the services underlying the Aurix System, or Aurix, to be comparable to the geometric mean cost of APC 5054 in the future;

● our ability to maintain classification of Aurix as APC 5054;

● whether CMS will continue to maintain the current national average reimbursement rate of $1,568 per Aurix treatment, and, more generally, our ability to continue to be reimbursed at a profitable national average rate per application in the future;

● uncertainties surrounding the price at which our common stock will continue trading on the OTC market (with such price having declined substantially) and the limited trading volume or liquidity of our common stock - as a result of our decrease in net tangible assets below the required threshold for trading on OTCQX, our common stock will move to the OTCQB market effective June 7, 2018, which could further restrict liquidity and our ability to raise capital through equity issuances;

● our reliance on several single source suppliers and our ability to source raw materials at affordable costs;

● our ability to protect our intellectual property;

● our compliance with governmental regulations;

● the success of our clinical study protocols under our CED program;

● our ability to contract with healthcare providers;

● our ability to successfully sell and market the Aurix System (as defined below);

● our ability to attract and retain key personnel; and

● our ability to successfully pursue strategic collaborations to help develop, support or commercialize our products.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results could differ materially from those anticipated in these forward-looking statements.

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In addition to the risks identified under the heading “Risk Factors” in our Annual Report and the other filings referenced above, other sections of this report may include additional factors which could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our business, or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

Finally, we can offer no assurances that we have correctly estimated the resources necessary to execute under our existing customer agreements and seek partners, co-developers or acquirers for our regenerative therapies post-reorganization. If a larger workforce or one with a different skillset is ultimately required to implement our post-reorganization strategy successfully, or if we inaccurately estimated the cash and cash equivalents necessary to finance our operations, or if we are unable to identify additional sources of capital if necessary to continue our operations, our business, results of operations, financial condition and cash flows may be materially and adversely affected.

The Company undertakes no obligation and does not intend to update, revise or otherwise publicly release any revisions to its forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of any unanticipated events.

Our Business

We are a regenerative therapies company developing and marketing products for chronic wound care primarily within the U.S. We commercialize innovative cell-based technologies that harness the regenerative capacity of the human body to trigger natural healing. The use of autologous (from self) biological therapies for tissue repair and regeneration is part of a transformative clinical strategy designed to improve long-term recovery in inherently complex chronic conditions with significant unmet medical needs.

Our current commercial offering consists of a point of care technology for the safe and efficient separation of autologous (i.e., the patient’s own) blood to produce a platelet based therapy for the chronic wound care market (“Aurix” or the “Aurix System”). The U.S. Food and Drug Administration, or FDA, cleared the Aurix System for marketing in 2007 as a device under Section 510(k) of the Federal Food, Drug, and Cosmetic Act, or FDCA. Aurix is the only platelet derived product cleared by the FDA for chronic wound care use and is indicated for most exuding wounds. The advanced wound care market, within which Aurix competes, is composed of advanced wound care dressings, wound care devices, and wound care biologics, and is estimated to be an approximate $13.4 billion global market, with the number of patients suffering from all forms of chronic wounds projected to increase worldwide at a rate of approximately eight percent per year through 2025.    

The Aurix System produces a platelet rich plasma, or PRP, gel at the point of care using the patient’s own platelets and plasma. Aurix comprises a natural, endogenous complement of protein and non-protein signal molecules that contribute to effective healing. During treatment, the patient’s platelets are activated and release hundreds of growth factor proteins and other signaling molecules that form a biologically active hematogel. Aurix delivers concentrations of the natural complement of cytokines, growth factors and chemokines that are known to regulate angiogenesis (i.e., the development of new blood vessels), cell growth and the formation of new tissue. Once applied to the prepared wound bed, the biologically active Aurix hematogel can restore the balance in the wound environment to transform a non-healing wound to a wound that heals naturally.

A 2012 Medicare National Coverage Determination, or NCD, from the Centers for Medicare & Medicaid Services, or CMS, reversed a twenty year old non-coverage decision for autologous blood derived products used in wound care; this NCD allows for Medicare coverage under the Coverage with Evidence Development, or CED, program.

The most significant near term growth opportunity for Aurix are the clinical studies being conducted under this CED program. Under the CED program, CMS provides reimbursement for items or services on the condition that they be furnished in approved clinical protocols or in the collection of additional clinical data. Current sales outside of the Federal Supply Schedule and Medicare reimbursement are practically limited to patients participating in certain Company-sponsored clinical studies approved by CMS under the CED program. The Company’s ongoing collaboration with Restorix Health, Inc., or Restorix, is intended to expand patient enrollment in three distinct Company-sponsored open-label clinical study protocols. Under these three protocols, Aurix can be used for venous, pressure and diabetic foot ulcers for wound types of all severities and for patients with various and often difficult comorbidities. Under the CED program, a facility treating a patient with Aurix is reimbursed by Medicare when health outcomes data are collected to inform future coverage decisions. The intent of the CED program is to evaluate the outcomes of Aurix therapy for the broader Medicare population when it is used in a “real world” continuum of care.  Thus far, the Company and Restorix have been unsuccessful in meaningfully expanding patient enrollment in the three clinical study protocols. 

If and only if the CED program is successfully completed, if supported by the health outcomes data generated, CMS may expand Medicare reimbursement for treatment of chronic non-healing wounds with Aurix as an autologous platelet-rich plasma product. By contrast, if the data generated show no substantial improvement in health outcomes for patients using Aurix therapy, CMS may determine not to provide unrestricted coverage for the Aurix System. CED programs have been employed for a variety of other therapies, including transcatheter aortic valve repair and cochlear implantation.  

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Although FDA cleared the Aurix System for marketing in 2007 under Section 510(k) of the FDCA, CMS only established economically viable reimbursement for the product beginning in 2016. For 2018, the CMS national average reimbursement rate for the Aurix System is $1,568 per treatment, which we believe provides appropriate payment to facilities for product usage and a compelling market opportunity for us. The Company markets the Aurix System at a cost of $700 per treatment to wound care facilities operating in the CED program.

Growth opportunities for the Aurix System in the United States in the near to intermediate term include the treatment of chronic wounds with Aurix in (i) the Medicare population under the NCD, when health outcomes data is collected under the CED program of CMS and (ii) the Veterans Affairs, or VA, healthcare system and other federal accounts settings.

Our Strategy

Our near-term strategic focus is on the successful execution and completion of the three clinical protocols for Aurix under the CMS CED program. The expansion of reimbursement to patients outside these protocols can be achieved only after successful conclusion of the data collection and submission of the resulting data to CMS. There are no assurances that broad access and reimbursement can be achieved. Because Medicare beneficiaries represent the majority of chronic wound patients in the United States and since commercial insurance coverage determinations often follow CMS coverage and reimbursement decisions, we believe that successful conclusion of the CED program would substantially increase the commercial value of Aurix. Thus, we believe that the market for innovative technologies that harness the innate regenerative capacity of the human body to trigger natural healing represents a significant opportunity from both a clinical and a business perspective.

Assuming that we are able to obtain immediate and substantial additional financing, our goal is to successfully commercialize the Aurix System in the U.S. for the treatment of chronic wounds. Key elements of our strategy to achieve this goal include steps to secure broad CMS reimbursement under the CED program:

● We secured a CMS coverage and reimbursement decision for Aurix therapy under the CED program in 2012 via the NCD and economically viable reimbursement rates beginning in 2016. The CED protocols require the collection of wound healing data including Quality of Life metrics for a population of approximately 2,200 Medicare beneficiaries across three separate and distinct wound etiologies.

● With the goal of executing the CED program efficiently and in a timely manner, we initiated a collaboration with Restorix in May 2016 to expand the number of study centers and to increase the rate of patient enrollment beyond what we have established independently. Restorix is a leading wound care management company overseeing day-to-day operations in approximately 200 outpatient wound care centers. The three protocols for the CED program are prospective, open-label, randomized (1:1) studies treating Medicare beneficiaries only. The studies will compare usual and customary care, or UCC, with Aurix plus UCC. The primary outcome measurement is time to heal. The three protocols comprise:

o Diabetic Foot Ulcers: The study endpoint is the earlier of complete healing or 12 weeks following enrollment and the estimated enrollment is 760 randomized patients. The first patient was enrolled in May 2015, and 124 patients have enrolled to date.

o Venous Leg Ulcers: The study endpoint is the earlier of complete healing or 12 weeks following enrollment and the estimated enrollment is 640 patients. The first patient was enrolled in March 2015, and 98 patients have enrolled to date.

o Pressure Ulcers: The study endpoint is the earlier of complete healing or 16 weeks following enrollment and the estimated enrollment is 800 patients. The first patient was enrolled in April 2015, and 47 patients have enrolled to date.

● To increase the opportunity for greater enrollment in our CED program, we have been in discussion with CMS’ Division of Practitioner Services regarding the fee paid (if any) by Medicare to the treating physician for services rendered during an Aurix treatment application under CED.  Unlike the facility fee reimbursed by Medicare as mandated by the CED National Coverage Determination, or NCD, for the Aurix product itself, any physician fee was to be established by the regional Medicare Administrative Contractors, or MACs, at their discretion. Given the Company's assessment of the MAC’s apparent lack of familiarity with CED generally as a CMS national initiative and Aurix as a product with limited usage and history in Medicare’s databases, establishment of a consistent physician fee reflective of the underlying work performed by a treating physician when utilizing Aurix therapy has been difficult. Our discussions with CMS have emphasized the potential benefit to the Aurix CED program in establishing a standard national payment rate applied consistently to all physicians treating patients in the CED protocols that provides an adequate economic payment to the physician for utilizing Aurix; however, we can provide no assurances that such a rate would become effective (i) at all, or (ii) at a level high enough to provide an adequate payment for physicians, or (iii) on a timely basis so as to provide a meaningful opportunity to the Company in light of its liquidity constraints, or that any establishment of such a standard rate would in fact have a sufficiently positive impact on patient enrollment in the CED studies.

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● To support our CED efforts, we have hired and deployed a small team of clinical affairs professionals. The clinical affairs group is focused on both support of health care providers and facilities - through the Restorix collaboration and those we have initiated outside the Restorix relationship - in their use of Aurix as well as facilitating the collection of the clinical data required to fulfill the Aurix Medicare CED requirements

Based on guidance from the CMS Coverage and Analysis Group (CAG), a CED cycle is considered complete when CMS completes a reconsideration of the existing National Coverage Determination and removes the requirement for study participation as a condition of coverage. The request for reconsideration would typically follow the same nine-month timetable as other NCD requests.  Each protocol operates independently and the diabetic foot protocol is expected to reach complete enrollment first, although we can provide no assurances to this effect. We can provide no assurances that the pace of enrollment will increase as expected or that any of the three protocols will reach their required enrollment levels. Each protocol also includes the option for Nuo to perform an interim analysis based on 50% enrollment with a view towards earlier submission of study data for publication and subsequent submission to CAG for consideration.

Assuming that we are able to obtain immediate and substantial additional financing, while we are focused primarily on the commercialization of our FDA-cleared Aurix System in the U.S., a secondary priority for us is to develop and commercialize our products in markets outside the U.S. Accordingly, as of December 31, 2014, we signed an exclusive licensing and distribution agreement for the Aurix System with Rohto Pharmaceutical Co., Ltd., or Rohto, providing them with an exclusive license and the right to develop and commercialize Aurix in Japan. The agreement stipulates royalty payments based on the net sales of Aurix in Japan and an additional future cash payment in the event a specific milestone is met. Pursuant to our amended license agreement with Millennia Holdings, Inc. (“Millennia”), we are obligated to pay Millennia 50% of any milestone payments received from Rohto. Rohto has assumed all responsibility for securing the marketing authorization from Japan’s Ministry of Health, Labor and Welfare while we will provide relevant product information, as well as clinical and other data to support Rohto’s regulatory activities.

Additionally, on May 5, 2016, we entered into an exclusive licensing and distribution agreement for the Aurix System with Boyalife Hong Kong Ltd., or Boyalife. Under this agreement, Boyalife received a non-transferable, exclusive license, with limited right to sublicense, to use certain of the intellectual property relating to our Aurix System. Boyalife is entitled to import, use for development, promote, market, sell and distribute Aurix in greater China (China, Hong Kong, Taiwan and Macau) for all regenerative medicine applications, including but not limited to wound care and topical dermatology applications in human and veterinary medicine.

We require significant additional capital to fully support an expanded commercialization initiative designed to increase market adoption and penetration of Aurix after completion of the CED protocols. See “– Liquidity and Capital Resources.”

The Science Underlying Aurix/Platelet Rich Plasma

Normal Wound Healing

The science underlying wound healing is well-established. An immediate early event critical for wound healing is the influx of platelets to the wound site. Platelets bind to elements within damaged tissue such as collagen fragments and endogenous thrombin molecules and are activated to release a diversity of growth factors and other biomolecules from their alpha and dense granules (Reed 2000, Nieswandt, 2003). These biomolecules provide signals essential for biological responses regulating hemostasis and effective tissue regeneration.

Chronic Wounds

Dysregulation of numerous cellular and biological responses contribute to the chronic wound phenotype. Chronic wounds have reduced levels of growth factors and concomitant decreases in cellular proliferation (Mast 1996). There is increased cellular senescence (Telgenhoff 2005), and there generally is a lack of perfusion that can inhibit the delivery of nutrients and cells required for regeneration (Guo 2010). As the body attempts to stave off infection, elevated concentrations of free radicals accumulate in the chronic wound and further damage surrounding tissue (Moseley 2004, James 2003).

Aurix Therapy

Aurix has been cleared by FDA as safe and effective with an indication for chronic wounds such as leg ulcers, pressure ulcers, and diabetic ulcers and other exuding wounds such as mechanically or surgically-debrided wounds. The Aurix therapeutic is formed by mixing a sample of a patient’s platelets and plasma with pharmaceutical grade thrombin and ascorbic acid. The thrombin activates platelets while ascorbic acid drives the synthesis of high tensile strength collagen, clears damaging free radicals and controls gel consistency. The topical dermal application of Aurix gel bypasses the lack of local perfusion to provide immediate signals for new tissue formation and ultimately healing.

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The Efficacy of Aurix Relates to Biological Activity Released by Platelets

Regenerative Capacity

More than 300 proteins are released by human platelets in response to thrombin activation (Coppinger, 2004). Important examples include vascular endothelial cell growth factor (VEGF), platelet derived growth factor (PDGF), epidermal growth factor (EGF), fibroblast growth factor (FGF) and transforming growth factor-beta (TGF-B) (Eppley 2004, Everts 2006). These proteins are critical for organized wound healing, regulating responses such as vascularization, cell proliferation, cell differentiation, and deposition of new extracellular matrix (Goldman 2004). Platelets also release chemokines such as Interleukin-8 (IL-8), stromal cell derived factor-1 (SDF-1), and platelet factor-4 (PF-4) (Chatterjee 2011, Gear 2003) that control the mobilization and migration of stem cells and fibroblasts, (Werner 2003 and Gillitzer 2001) that contribute to tissue regeneration.

Anti-infective Activity

Populations of bioburden in chronic wounds vary over time and wounds invariably retain or become re-infected with some level of bacteria that is detrimental to healing (Howell-Jones 2005). In addition to regenerative capacity, platelets release anti-microbial peptides effective against a broad range of pathogens including Methicillin Resistant Staphylococcus Aureus (MRSA) (Moojen 2007, Jia 2010, Tang 2002, Bielecki 2007).

Clinical Efficacy

Multiple efficacy and effectiveness studies have been published in peer reviewed journals documenting the impact of using Aurix to treat chronic wounds. Key data include:

● In a double blinded randomized controlled trial, 81% of the most common-sized diabetic foot ulcers healed with Aurix compared with 42% of control wounds. Mean time to healing was 6 weeks. (Driver V, Hanft J, Fylling, C et al.:  A Prospective, Randomized, Controlled Trial of Autologous Platelet-Rich Plasma Gel for the Treatment of Diabetic Foot Ulcers. Ostomy Wound Management, 2006; 52(6): 68-87.) 

● In 285 chronic wounds in 200 patients, 96.5% of the wounds had a positive response within an average of 2.2 weeks with an average of 2.8 Aurix treatments (de Leon J, Driver VR, Fylling CP, Carter MJ, Anderson C, Wilson J, et al.:  The Clinical Relevance of Treating Chronic Wounds With an Enhanced Near-physiological Concentration of Platelet-Rich Plasma (PRP) Gel.  Advances in Skin and Wound Care, 2011; 24(8), 357-368.) 

● In a retrospective, longitudinal study of 40 Wagner grade II through IV diabetic foot ulcers, most with critical limb ischemia, wounds increased in size in the approximate 100 days prior to the initiation of comprehensive wound care treatment. Upon treatment with debridement, revascularization, antibiotics and off-loading, the wounds continued to increase in size over a subsequent 75 day period. Once they were then treated with Aurix, the wounds immediately changed healing trajectory and 83% of the wounds healed with an average of 6.1 Aurix treatments per wound (Sakata, J., Sasaki, S., Handa, K., et al.  A Retrospective, Longitudinal Study to Evaluate Healing Lower Extremity Wounds in Patients with Diabetes Mellitus and Ischemia Using Standard Protocols of Care and Platelet-Rich Plasma Gel in a Japanese Wound Care Program. Ostomy Wound Management, 2012; 58(4):36-49.)

Bankruptcy and Emergence from Bankruptcy

On January 26, 2016, the Company filed a voluntary petition in the United States Bankruptcy Court for the District of Delaware, or the Bankruptcy Court, seeking relief under Chapter 11 of Title 11 of the United States Code, or the Bankruptcy Code, which is administered under the caption "In re: Nuo Therapeutics, Inc.", Case No. 16-10192 (MFW). We refer to this petition and the related case as the Chapter 11 Case. During the pendency of the Chapter 11 Case, the Company continued to operate its business as a "debtor-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

The Company emerged from bankruptcy protection effective May 5, 2016 in accordance with the Modified First Amended Plan of Reorganization of the Debtor under Chapter 11 of the Bankruptcy Code, as confirmed by the April 25, 2016 Order Granting Final Approval of Disclosure Statement and Confirming Debtor's Plan of Reorganization. We refer to May 5, 2016 as the Effective Date, to the order as the Confirmation Order and to the plan of reorganization, as confirmed by the Confirmation Order, as the Plan of Reorganization.

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Pursuant to the Plan of Reorganization, as of the Effective Date all then existing equity interests of the Company, including shares of the Company's common stock, warrants and options, outstanding immediately prior to the Effective Date were cancelled, and the Company issued new common stock, warrants and Series A preferred stock.

On the Effective Date, the Company filed a Certificate of Designations of Series A Preferred Stock, or Certificate of Designations, with the Delaware Secretary of State, designating 29,038 shares of the Company's undesignated preferred stock, par value $0.0001 per share, as Series A preferred stock, or Series A Preferred Stock. On the Effective Date, the Company issued 29,038 shares of Series A Preferred Stock to creditors affiliated with Deerfield Management Company, L.P., in accordance with the Plan of Reorganization. We refer to Deerfield Management Company, L.P. and its affiliates Deerfield Private Design Fund II, L.P., Deerfield Private Design International II, L.P., and Deerfield Special Situations Fund, L.P. collectively as Deerfield. The Series A Preferred Stock has no stated maturity date, is not convertible or redeemable and carries a liquidation preference of $29,038,000, which is required to be paid to holders of such Series A Preferred Stock before any payments are made with respect to shares of common stock (and other capital stock that is not issued on parity or senior to the Series A Preferred Stock) upon a liquidation or change in control transaction. For so long as Series A Preferred Stock is outstanding, the holders of Series A Preferred Stock have the right to nominate and elect one member of our Board of Directors. Lawrence S. Atinsky serves as the designee of the holders of Series A Preferred Stock, which are all currently affiliates of Deerfield Management Company, L.P., of which Mr. Atinsky is a Partner. The Series A Preferred Stock have voting rights, voting with the common stock as a single class, with each share of Series A Preferred Stock having the right to five votes, currently representing approximately one percent (1%) of the voting rights of the capital stock of the Company, and the holders of Series A Preferred Stock have the right to approve certain transactions. Among other restrictions, the Certificate of Designations for our Series A Preferred Stock limits the Company's ability to (i) issue securities that are senior or pari passu with the Series A Preferred Stock, (ii) incur debt (other than for working capital purposes not in excess of $3.0 million), (iii) issue securities that are junior to the Series A Preferred Stock and that provide certain consent rights to the holders of such junior securities in connection with a liquidation or contain certain liquidation preferences, (iv) pay dividends on or purchase shares of its capital stock, and (v) change the authorized number of members of its Board of Directors to a number other than five, in each case without the consent of holders representing at least two-thirds of the outstanding shares Series A Preferred Stock.

In accordance with the Plan of Reorganization, as of the Effective Date, the Company issued 7,500,000 shares of common stock and warrants to purchase 6,180,000 shares of common stock to certain accredited investors in a private placement exempt from registration. The warrants terminate on May 5, 2021 and are exercisable at any time at exercise prices ranging from $0.50 per share to $0.75 per share. 

A significant majority of the accredited investors who purchased shares of common stock on the Effective Date furthermore executed backstop commitments to purchase up to 12,800,000 additional shares of common stock for an aggregate purchase price of up to $3,000,000. We refer to these commitments as the Backstop Commitment. During 2017, the Company exercised its rights under the Backstop Commitment in full and issued 12,800,000 shares of its common stock (the “Backstop Shares”) for gross proceeds of $3 million.

As of the Effective Date, the Company entered into a registration rights agreement, or the Registration Rights Agreement, with the investors. The Registration Rights Agreement provides certain resale registration rights to the investors with respect to the shares of common stock issued in the Recapitalization Financing. Pursuant to the Registration Rights Agreement, the Company filed a registration statement (File No. 333-214748) registering the resale of the common stock issued in the Recapitalization Financing. The Company has agreed under the Registration Rights Agreement to use its best efforts to keep the registration statement continuously effective under the Securities Act until the earliest of (i) the date when all registrable securities under the registration statement may be sold without registration or restriction pursuant to Rule 144(b) under the Securities Act or any successor provision or (ii) the date when all registrable securities under the registration statement have been sold, subject to the Company's ability to suspend sales under the registration statement in certain circumstances. As the Company does not qualify for forward incorporation by reference, the Company has suspended sales under the registration statement pending the filing and effectiveness of a post-effective amendment containing updated financial information.

Quotation of the common stock commenced on OTCQB on January 20, 2017 under the trading symbol "AURX" and was moved to OTCQX as of March 16, 2017. On March 6, 2017, the shares of common stock became eligible for Deposit/Withdrawal At Custodian, or DWAC, distribution through The Depository Trust Company, or DTC. DWAC transfer allows brokers and custodial banks to make electronic book-entry deposits and withdrawals of shares of common stock into and out of their DTC book-entry accounts using a "Fast Automated Securities Transfer", or FAST, service.  As of the date of filing of this Quarterly Report, trading in our common stock continues to be limited and we cannot make any assurances that the trading volume will increase, or, if and when it increases, that it will be sustained at any level.  In addition, we have received notice from OTCMarkets that we do not meet the penny stock exemption criteria as a result of our decrease in net tangible assets below the required threshold.  As such, our common stock will move to the OTCQB market effective June 7, 2018, which could further restrict liquidity and our ability to raise capital through equity issuances.

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Results of Operations

Comparison of Quarters Ended March 31, 2018 and 2017

The amounts presented in this comparison section are rounded to the nearest thousand.

Revenue and Gross Profit 

The following table presents the profitability of sales for the periods presented:

	Quarter ended March 31, 2018			Quarter ended March 31, 2017
Product sales	$	125,000		$	113,000
Royalties		35,000			60,000
Total revenues		160,000			173,000
Product cost of sales		49,000			270,000
Total cost of sales		49,000			270,000
Gross profit	$	111,000		$	(97,000	)
Gross margin %		69	%		(56	)%

Revenues decreased modestly by $13,000 to $160,000 comparing the three months ended March 31, 2018 to the three months ended March 31, 2017. The decrease was primarily attributable to a $25,000 decrease in royalties on the Aldeflour product partially offset by slightly higher Aurix product sales.

Overall gross profit increased $208,000 to $111,000 while overall gross margin increased to 69% from (56)%, comparing the three months ended March 31, 2018 to the three months ended March 31, 2017. The increase in gross profit resulted primarily from approximately $183,000 and $30,000 of non-cash amortization expense of intangible assets on Aurix centrifuges and a prepaid royalty, respectively, recorded in the three- month period ended March 31, 2017. As all intangible assets were considered impaired as of December 31, 2017, no amortization expense was recognized in the three months ended March 31, 2018.

Operating Expenses

Operating expenses decreased $809,000 (51%) to $779,000 comparing the three months ended March 31, 2018 to the three months ended March 31, 2017. The decrease was due to decreases across substantially all expense components from reduced headcount and cost saving initiatives. A discussion of the various components of operating expenses follows below.

Sales and Marketing

Sales and marketing decreased $153,000 (71%) to $61,000 comparing the three months ended March 31, 2018 to the three months ended March 31, 2017. The decrease was primarily due to elimination of the remaining direct sales personnel early in the first quarter 2018.

Research and Development

Research and development expenses decreased $141,000 (35%) to $258,000 comparing the three months ended March 31, 2018 to the three months ended March 31, 2017. The decrease was primarily due to (i) reduced headcount in the Clinical Affairs area and corresponding lower compensation expenses, (ii) no depreciation expense in the three months ended March 31, 2018 as software costs are now fully depreciated, and (iii) decreased clinical site training fees.

General and Administrative

General and administrative expenses decreased $515,000 (53%) to $460,000 comparing the three months ended March 31, 2018 to the three months ended March 31, 2017. The decrease was primarily due to (i) the $240,000 bad debt recovery on a prior fully reserved other receivable, (ii) lower compensation expense due to reduced headcount, and (iii) lower professional fees including legal and audit services.

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Other Income (Expense)

Other expense, net decreased by approximately $5,000 to $3,000 comparing the three months ended March 31, 2018 to the three months ended March 31, 2017.

Liquidity and Capital Resources

We are rapidly depleting our cash resources and our ability to continue to operate is in immediate jeopardy. For the three months ended March 31, 2018, we incurred net losses from operations of approximately $0.7 million. At March 31, 2018 we had cash and cash equivalents of approximately $147,000, total current assets of approximately $0.8 million and total current liabilities of approximately $1.2 million. As of May 11, 2018, we had cash and cash equivalents of approximately $145,000.

We have a history of losses and are not currently profitable. Our revenues have continued to decline significantly comparing 2017 with 2016, and 2016 with 2015. As a result of the application of fresh-start accounting on the Effective Date, our retained earnings (deficit) was zero and our total stockholders’ equity was approximately $17.9 million on such date. As of March 31, 2018, our accumulated deficit was approximately $21.3 million and our stockholders' deficit was approximately $0.2 million. 

During the quarter ended September 30, 2017, we withdrew our attempted registered offering and related refinancing of our Series A Preferred Stock, and exercised our rights under the Backstop Commitment in full.  As a result, we issued an aggregate of 12,800,000 shares of common stock for gross proceeds of approximately $3.0 million, which more than doubled the number of our outstanding shares of common stock. 

Our continuing losses and depleted cash raise substantial doubt about our ability to continue as a going concern, and we need to raise substantial additional funds immediately in order to continue to conduct our business.  If we are unable within the next 30 days to raise substantial additional funds or otherwise restructure our business, we will likely be forced to cease operations and liquidate our assets. If we were required to liquidate today, the holders of our common stock would not receive any consideration for their common stock as a result of the liquidation preference of the holder of our Series A Preferred Stock.

Even assuming we succeed in raising substantial additional funds immediately to avoid liquidation, we expect to incur losses and negative operating cash flows in the foreseeable future. We may never generate sufficient revenues to achieve and maintain profitability. Historically, we have financed our operations through a combination of the sale of debt, equity and equity-linked securities, licensing, royalty, and product revenues. Until we can generate a sufficient amount of revenues to finance our cash requirements, which we may never do, we need to finance future cash needs.  It is substantially uncertain whether we will be able to obtain such financing on satisfactory terms or at all.

Any equity financings may cause further substantial dilution to our stockholders and could involve the issuance of securities with rights senior to the common stock. Any allowed debt financings (which are restricted under the terms of the Certificate of Designations for our Series A Preferred Stock) may require us to comply with onerous financial covenants and restrict our business operations. Our ability to complete additional financings is dependent on, among other things, the state of the capital markets at the time of any proposed equity or debt offering, state of the credit markets at the time of any proposed loan financing, market reception of the Company and perceived likelihood of success of our business model, and on the relevant transaction terms, among other things. We may not be able to obtain additional capital as required to finance our efforts, through asset sales, equity or debt financings, or any combination thereof, on satisfactory terms or at all. Additionally, any such financing, if at all obtained, may not be adequate to meet our capital needs and to support our operations.   

Even assuming we succeed in raising substantial additional funds immediately to avoid liquidation, if we are unable to secure sufficient capital to fund our operating activities beyond the immediate future or we are unable to increase revenues significantly over that time period, we may be forced to delay the completion of, or significantly reduce the scope of, our current business plan, including our plan to penetrate the market serving Medicare beneficiaries and fulfill the related data gathering requirements as stipulated by the Medicare CED coverage determination, delay the pursuit of commercial insurance reimbursement for our wound treatment technologies, and postpone the hiring of new personnel.   If we are unable to secure sufficient capital to fund our operating activities and are unable to increase revenues significantly, we will likely be required to cease operations.

Our business is subject to certain risks and uncertainties including those described in "Item 1.A Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2017.

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Cash Flows

Net cash provided by (used in) operating, investing, and financing activities for the periods presented were as follows (in millions):

	Quarter ended March 31, 2018			Quarter ended March 31, 2017
Cash flows used in operating activities	$	(0.5	)	$	(1.3	)
Cash flows used in investing activities	$	-		$	-
Cash flow provided by financing activities	$	-		$	-

Operating Activities

Cash used in operating activities for the three months ended March 31, 2018 of approximately $0.5 million primarily reflects our net loss of approximately $0.7 million adjusted by i) approximately $0.2 million bad debt recovery and ii) approximately $0.3 million increase for changes in operating assets and liabilities.

Cash used in operating activities for the three months ended March 31, 2017 of approximately $1.3 million primarily reflects our net loss of approximately $1.7 million adjusted by (i) approximately $0.3 million of depreciation and amortization expense and (ii) an approximately $0.1 million increase for changes in operating assets and liabilities.

Investing Activities

We did not have any investing activities for the three months ended March 31, 2018 and 2017. 

Financing Activities

We did not have any financing activities for the three months ended March 31, 2018 and 2017. 

Inflation

The Company believes that the rates of inflation in recent years have not had a significant impact on its operations.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Critical Accounting Policies

A “critical accounting policy” is one that is both important to the portrayal of our financial condition and results of operations and that requires management’s most difficult, subjective or complex judgments. Such judgments are often the result of a need to make estimates about the effect of matters that are inherently uncertain. We have identified the following accounting policies as critical to the successor company.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the accompanying condensed consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, allowance for inventory obsolescence, allowance for doubtful accounts, contingent liabilities, fair value and depreciable lives of long-lived assets (including property and equipment, intangible assets and goodwill), deferred taxes and associated valuation allowance and the classification of our long-term debt. Actual results could differ from those estimates.

Revenue Recognition

Prior to January 1, 2018, revenues were recognized when the four basic criteria for recognition were met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) consideration is fixed or determinable; and (4) collectability is reasonably assured. The Company adopted new accounting guidance for revenue recognition effective January 1, 2018 which did not have a material impact on the Company’s financial statements. Beginning January 1, 2018, the Company analyzes contracts to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers; (ii) identification of distinct performance obligations in the contract; (iii) determination of contract transaction price; (iv) allocation of contract transaction price to the performance obligations; and (v) determination of revenue recognition based on timing of satisfaction of the performance obligation. The Company recognizes revenues upon the satisfaction of its performance obligations (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.  

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We provide for the sale of our products, including disposable processing sets and supplies to customers. Revenue from the sale of products is recognized upon shipment of products to the customers. We do not maintain a reserve for returned products as in the past those returns have not been material and are not expected to be material in the future.

Percentage-based fees on licensee sales of covered products are generally recorded as products are sold by licensees and are reflected as royalties in the condensed consolidated statements of operations. Direct costs associated with product sales and royalty revenues are recorded at the time that revenue is recognized.

Unadopted Accounting Pronouncements

In February 2016, the FASB issued guidance for accounting for leases. The guidance requires lessees to recognize assets and liabilities related to long-term leases on the balance sheet and expands disclosure requirements regarding leasing arrangements. The guidance is effective for reporting periods beginning after December 15, 2018 and early adoption is permitted. The guidance must be adopted on a modified retrospective basis and provides for certain practical expedients. We are currently evaluating the impact that this guidance will have on our consolidated financial statements.

We have evaluated all other issued and unadopted Accounting Standards Updates and believe the adoption of these standards will not have a material impact on our results of operations, financial position, or cash flows.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management has carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of March 31, 2018. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our recent reduction in staff may affect our ability to conduct our operations and other functions effectively, which may materially affect our internal control over financial reporting in future periods.

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PART II
 
OTHER INFORMATION

Item 1. Legal Proceedings.

Not Applicable. 

Item 1A. Risk Factors.

Not Applicable.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3.     Defaults Upon Senior Securities.

None.

Item 4.     Mine Safety Disclosures.

Not applicable. 

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits listed in the accompanying Exhibit Index are furnished as part of this Report.

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SIGNATURES

Pursuant to the requirements 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.

	NUO THERAPEUTICS, INC.
Date: May 14, 2018
By:	/s/ David E. Jorden
	David E. Jorden Chief Executive Officer and Chief Financial Officer
	(Principal Executive Officer and Principal Financial Officer)

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EXHIBIT INDEX

Exhibit Number	Description
31	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Principal Executive Officer and Principal Financial 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 Nuo Therapeutics, Inc. Form 10-Q for the quarter ended March 31, 2018, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets at March 31, 2018 and December 31, 2017, (ii) Consolidated Statements of Operations for the three month periods ended March 31, 2018 and 2017, (iii) Consolidated Statements of Cash Flows for the three month periods ended March 31, 2018 and 2017 and (iv)  Notes to the Unaudited Consolidated Financial Statements.

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EX-31

Exhibit 31

Certification of Principal Executive and Principal Financial Officer Pursuant to Exchange Act Rule

13a-14(a)/15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, David E. Jorden, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Nuo Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2018
 

/s/ David E. Jorden                                        
David E. Jorden
Chief Executive Officer and Chief Financial Officer

(Principal Executive Officer and Principal Financial Officer)

A signed original of this written statement has been provided to Nuo Therapeutics, Inc. and will be retained by Nuo Therapeutics, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

Exhibit 32

Certification of Principal Executive and Principal Financial Officer Pursuant to

18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. §1350 and in connection with the Quarterly Report on Form 10-Q of Nuo Therapeutics, Inc. (the “Company”) for the period ended March 31, 2018 (the “Report”), I, David E. Jorden, Chief Executive Officer and Chief Financial Officer of the Company, hereby certify that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 14, 2018       /s/ David E. Jorden                               David E. Jorden Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer)

 A signed original of this written statement has been provided to Nuo Therapeutics, Inc. and will be retained by Nuo Therapeutics, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2018	May 11, 2018
Document Information [Line Items]
Entity Registrant Name	Nuo Therapeutics, Inc.
Entity Central Index Key	0001091596
Trading Symbol	aurx
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		22,722,400
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents	$ 146,935	$ 693,515
Accounts and other receivable, net	341,605	114,331
Inventory, net	37,198	35,590
Prepaid expenses and other current assets	238,091	341,671
Total current assets	763,829	1,185,107
Property and equipment, net	193,604	223,616
Deferred costs and other assets	15,316	15,316
Total assets	972,749	1,424,039
Current liabilities
Accounts payable	536,313	380,280
Accrued expenses and liabilities	617,941	556,557
Total current liabilities	1,154,254	936,837
Other liabilities	2,888	4,331
Total liabilities	1,157,142	941,168
Commitments and contingencies (Note 8)
Stockholders' equity (deficit)
Preferred stock; $0.0001 par value, 1,000,000 authorized, 29,038 issued and outstanding; liquidation value of $29,038,000	3	3
Common stock; $0.0001 par value, 31,500,000 authorized, 22,722,400 issued and outstanding	2,272	2,272
Additional paid-in capital	21,158,387	21,155,404
Accumulated deficit	(21,345,055)	(20,674,808)
Total stockholders' equity (deficit)	(184,393)	482,871
Total liabilities and stockholders' equity (deficit)	$ 972,749	$ 1,424,039

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.001
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	29,038	29,038
Preferred stock, shares outstanding (in shares)	29,038	29,038
Preferred stock, liquidation value	$ 29,038,000	$ 29,038,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	31,500,000	31,500,000
Common stock, shares issued (in shares)	22,722,400	22,722,400
Common stock, shares outstanding (in shares)	22,722,400	22,722,400

XML

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenue:
Revenue	$ 159,943	$ 172,743
Costs of revenue
Costs of sales	49,004	270,087
Total costs of revenue	49,004	270,087
Gross profit (loss)	110,939	(97,344)
Operating expenses
Sales and marketing	61,123	213,700
Research and development	258,035	399,414
General and administrative	459,507	974,413
Total operating expenses	778,665	1,587,527
Loss from operations	(667,726)	(1,684,871)
Other income (expense)
Interest, net	44	(6,579)
Other	(2,565)	(1,150)
Total other expense	(2,521)	(7,729)
Net loss	$ (670,247)	$ (1,692,600)
Loss per common share
Basic (in dollars per share)	$ (0.03)	$ (0.17)
Diluted (in dollars per share)	$ (0.03)	$ (0.17)
Weighted average common shares outstanding
Basic (in shares)	22,722,400	9,927,112
Diluted (in shares)	22,722,400	9,927,112
Product [Member]
Revenue:
Revenue	$ 124,910	$ 113,082
Royalty [Member]
Revenue:
Revenue	$ 35,033	$ 59,661

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (670,247)	$ (1,692,600)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	26,084	310,045
Stock-based compensation	2,983	15,808
Bad debt (recovery) expense	(239,660)	466
Increase in allowance for inventory obsolescence	949	915
Loss (gain) on the disposal of fixed assets	3,928	(1,205)
Change in operating assets and liabilities:
Accounts and other receivable	12,386	56,222
Inventory	(2,557)	4,317
Prepaid expenses and other current assets	103,580	(47,773)
Other assets		30,208
Accounts payable	156,033	(14,267)
Accrued expenses and liabilities	61,384	75,369
Other liabilities	(1,443)	(19,756)
Net cash used in operating activities	(546,580)	(1,282,251)
Net decrease in cash, cash equivalents and restricted cash	(546,580)	(1,282,251)
Cash, cash equivalents and restricted cash, beginning of period	693,515	2,673,526
Cash, cash equivalents and restricted cash, end of period	146,935	1,391,275
Supplemental cash flow information
Interest expense paid in cash		665
Income taxes paid in cash

XML

Note 1 - Description of Business and Bankruptcy Proceedings

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Nature of Operations [Text Block]

Note

1

– Description of Business and Bankruptcy Proceedings

Description of Business

Nuo Therapeutics, Inc. (“Nuo Therapeutics,” the “Company,” “we,” “us,” or “our”) is a biomedical company marketing its products primarily within the U.S. We commercialize innovative cell-based technologies that harness the regenerative capacity of the human body to trigger natural healing. The use of autologous (from self) biological therapies for tissue repair and regeneration is part of a transformative clinical strategy designed to improve long term recovery in complex chronic conditions with significant unmet medical needs. Growth opportunities for the Aurix System in the United States in the near to intermediate term include the treatment of chronic wounds with Aurix in: (i) the Medicare population under a National Coverage Determination (“NCD”), when registry data is collected under the Coverage with Evidence Development (“CED”) program of the Centers for Medicare & Medicaid Services (“CMS”); and (ii) the Veterans Affairs (“VA”) healthcare system and other federal accounts settings.

As of

March 31, 2018,

our commercial offering consists solely of the Aurix point of care technology for the safe and efficient separation of autologous blood to produce a platelet based therapy for the chronic wound care market. Prior to

May 5, 2016 (

the “Effective Date”), the effective date of the Company’s emergence from bankruptcy under a confirmed Plan of Reorganization (See Note

6

), we had

two

distinct platelet rich plasma (“PRP”) devices: the Aurix

®

System for wound care, and the Angel

®

concentrated Platelet Rich Plasma (“cPRP”) System for orthopedics markets. Prior to the Effective Date, Arthrex, Inc. (“Arthrex”) was our exclusive distributor for Angel. Pursuant to the Plan of Reorganization, on

May 5, 2016,

the Company assigned its rights, title and interest in and to its existing license agreement with Arthrex to Deerfield Management Company, L.P. and its affiliates (“Deerfield”), as well as rights to collect royalty payments thereunder.

XML

Note 2 - Liquidity and Summary of Significant Accounting Principles

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Significant Accounting Policies [Text Block]

Note

2

– Liquidity and Summary of Significant Accounting Principles

Liquidity

Our operations are subject to certain risks and uncertainties including, among others, current and potential competitors with greater resources, dependence on significant customers, lack of operating history, uncertainty of future profitability and possible fluctuations in financial results. Since our inception, we have financed our operations by raising debt, issuing equity and equity-linked instruments, and executing licensing arrangements, and to a lesser extent by generating royalties and product revenues. We have incurred, and continue to incur, recurring losses and negative cash flows. During the quarter ended

September 30, 2017,

we withdrew our attempted registered offering and related refinancing of our Series A preferred stock, and exercised our rights under the Backstop Commitment in full.  As a result of that exercise, we issued an aggregate of

12,800,000

shares of common stock (the "Backstop Shares") for gross proceeds of approximately

$3.0

million, which more than doubled the number of our outstanding shares of common stock. At

March 31, 2018,

we had cash and cash equivalents on hand of approximately

$147,000

 and had

no

outstanding debt.

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. The propriety of using the going-concern basis is dependent upon, among other things, the achievement of future profitable operations, the ability to generate sufficient cash from operations, and potential other funding sources, including cash on hand, to meet our obligations as they become due.

We believe based on the operating cash requirements and capital expenditures expected for the next

twelve

months, that our current resources, projected revenue from sales of Aurix, and limited license fees and royalties from our license of certain aspects of the ALDH technology, are insufficient to support our operations beyond the next

30

days.  As such, we believe that substantial doubt about our ability to continue as a going concern exists.

We require additional capital and seek to continue financing our operations with external capital for the foreseeable future.   Any equity financings

may

cause further substantial dilution to our stockholders and could involve the issuance of securities with rights senior to the common stock. Any allowed debt financings (which are restricted under the terms of the Certificate of Designations for our Series A Preferred Stock)

may

require us to comply with onerous financial covenants and restrict our business operations. Our ability to complete additional financings is dependent on, among other things, the state of the capital markets at the time of any proposed equity or debt offering, state of the credit markets at the time of any proposed loan financing, market reception of the Company and perceived likelihood of success of our business model, and on the relevant transaction terms, among other things. We

may

not

be able to obtain additional capital as required to finance our efforts, through asset sales, equity or debt financings, or any combination thereof, on satisfactory terms or at all. Additionally, any such financing, if at all obtained,

may

not

be adequate to meet our capital needs and to support our operations.

If we are unable to secure sufficient capital to fund our operating activities or we are unable to increase revenues significantly, we

may

be forced to delay the completion of, or significantly reduce the scope of, our current business plan, including our plan to penetrate the market serving Medicare beneficiaries and fulfill the related data gathering requirements as stipulated by the Medicare CED coverage determination, delay the pursuit of commercial insurance reimbursement for our wound treatment technologies, and postpone the hiring of new personnel.   Moreover, if we are unable within the next

30

 days to secure sufficient capital to fund our ongoing operating activities, we will likely be required to cease operations.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do

not

include all the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). In our opinion, the accompanying unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly our financial position, results of operations and cash flows. The consolidated balance sheet at

December 31, 2017,

has been derived from audited financial statements of the Company as of that date. The interim unaudited consolidated results of operations are

not

necessarily indicative of the results that

may

occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules and regulations prescribed by the SEC. We believe that the disclosures provided herein are adequate to make the information presented

not

misleading when these unaudited interim consolidated financial statements are read in conjunction with the audited financial statements and notes previously included in the Company’s Annual Report on Form

10

-K for the year ended

December 31, 2017.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned and controlled subsidiary Aldagen, Inc. (“Aldagen”). All significant inter-company accounts and transactions are eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but

not

limited to, stock-based compensation, allowance for inventory obsolescence, allowance for doubtful accounts, contingent liabilities, fair value and depreciable lives of long-lived assets (including property and equipment, intangible assets and goodwill), deferred taxes and associated valuation allowance and the classification of our long-term debt. Actual results could differ from those estimates.

Credit Concentration

We generate accounts receivable from the sale of our products. In addition, other receivables consist primarily of a settlement amount for a prior value added tax receivable due from the contract manufacturer of the prior Angel product line and receivable for royalties due for sales of Aldeflour. Customers or other receivables balances in excess of

10%

of total receivables at

March 31, 2018

and

December 31, 2017

were as follows:

	March 31, 2018		December 31, 2017
Customer A		70%		72%
Customer B		10%		12%

Revenue from significant customers exceeding

10%

of total revenues for the periods presented was as follows:

	Three Months ended March 31, 2018		Three Months ended March 31, 2017
Customer B		22%		35%
Customer C		14%		-

Historically, we used single suppliers for several components of the Aurix product line. We outsource the manufacturing of various products to contract manufacturers. While we believe these manufacturers demonstrate competency, reliability and stability, there is

no

assurance that

one

or more of them will

not

experience an interruption or inability to provide us with the products needed to satisfy customer demand. Additionally, while most of the components of Aurix are generally readily available on the open market, a reagent, bovine thrombin, is available exclusively through Pfizer, with whom we have an established vendor relationship.

Cash Equivalents

We consider all highly liquid instruments purchased with an original maturity of

three

months or less to be cash equivalents. We maintain our cash and cash equivalents in the form of money market deposit accounts and qualifying money market funds, and checking accounts with financial institutions that we believe are credit worthy.

Accounts Receivables

We generate accounts receivables from the sale of our products. We provide for an allowance against receivables for estimated losses that

may

result from a customer’s inability or unwillingness to pay. The allowance for doubtful accounts is estimated primarily based upon historical write-off percentages, known problem accounts, and current economic conditions. Accounts are written off against the allowance for doubtful accounts when we determine that amounts are

not

collectable. Recoveries of previously written-off accounts are recorded when collected. At

March 31, 2018,

we maintained an allowance for doubtful accounts of approximately

$2,000.

At

December 31, 2017,

we maintained an allowance for doubtful accounts of approximately

$306,000

as we fully reserved for the value added tax receivable. Effective with an executed settlement agreement as of

March 

29,

2018,

we recognized a bad debt recovery of approximately

$240,000

and received the settlement amount on

April 9, 2018.

Inventory

Our inventory is produced by

third

-party manufacturers and consists of raw materials and finished goods. Inventory cost is determined on a

first

-in,

first

-out basis and is stated at the lower of cost or net realizable value. We maintain an inventory of kits, reagents, and other disposables that have shelf-lives that generally range from

18

months to

two

years.

As of

March 31, 2018,

our inventory consisted of approximately

$32,000

of finished goods and

$29,000

of raw materials. As of

December 31, 2017,

our inventory consisted of approximately

$40,000

of finished goods and

$18,000

of raw materials.

We provide for an allowance against inventory for estimated losses that

may

result in excess and obsolete inventory (i.e., from the expiration of products). Our allowance for expired inventory is estimated based upon the inventory’s remaining shelf-life and our anticipated ability to sell such inventory, which is estimated using historical usage and future forecasts, within its remaining shelf life. At

March 31, 2018

and

December 31, 2017,

the Company maintained an allowance for expired and excess and obsolete inventory of approximately

$24,000

and

$23,000,

respectively. Expired products are segregated and used for demonstration purposes only; the Company records the associated expense for this reserve to cost of sales in the consolidated statements of operations.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and is depreciated, using the straight-line method, over its estimated useful life ranging from

one

to

six

years. Upon emergence from bankruptcy, property and equipment remaining lives were estimated based on the estimated remaining useful lives of the assets. Leasehold improvements are amortized, using the straight-line method, over the lesser of the expected lease term or its estimated useful life ranging from

one

to

three

years. Amortization of leasehold improvements is included in depreciation expense. Maintenance and repairs are charged to operations as incurred. When assets are disposed of, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in other income (expense).

Centrifuges

may

be sold or placed at

no

charge with customers. Depreciation expense for centrifuges that are available for sale or placed at

no

charge with customers are charged to cost of sales. Depreciation expense for centrifuges used for sales and marketing and other internal purposes are charged to general and administrative expenses.

Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset

may

not

be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. Recoverability measurement and estimating of undiscounted cash flows is done at the lowest possible level for which we can identify assets. If such assets are considered to be impaired, impairment is recognized as the amount by which the carrying amount of assets exceeds the fair value of the assets.

Revenue

Recognition

Prior to

January 1, 2018,

revenues were recognized when the

four

basic criteria for recognition were met: (

1

) persuasive evidence of an arrangement exists; (

2

) delivery has occurred or services have been rendered; (

3

) consideration is fixed or determinable; and (

4

) collectability is reasonably assured. The Company adopted new accounting guidance for revenue recognition effective

January 1, 2018

which did

not

have a material impact on the Company’s financial statements.

Beginning

January 1, 2018,

the Company analyzes contracts to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers; (ii) identification of distinct performance obligations in the contract; (iii) determination of contract transaction price; (iv) allocation of contract transaction price to the performance obligations; and (v) determination of revenue recognition based on timing of satisfaction of the performance obligation. The Company recognizes revenues upon the satisfaction of its performance obligations (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.

We provide for the sale of our products, including disposable processing sets and supplies to customers. Revenue from the sale of products is recognized upon shipment of products to the customers. We do

not

maintain a reserve for returned products, as in the past those returns have

not

been material and are

not

expected to be material in the future. Percentage-based fees on licensee sales of covered products are generally recorded as products are sold by licensees, and are reflected as royalties in the consolidated statements of operations. Direct costs associated with product sales and royalty revenues are recorded at the time that revenue is recognized.

License Agreement with Rohto

The Company’s license agreement with Rohto (See Note

4

– Distribution, Licensing and Collaboration Arrangements

) contains multiple promises that include the delivery of a “functional” license and other ancillary activities such as maintaining its intellectual property and providing regulatory support and training to Rohto. The Company has determined that the ancillary activities do

not

constitute distinct promises and, accordingly, the Company combined the ancillary activities with the delivered license as a single performance obligation.  The Company recognized the total non-contingent transaction price of

$3.0

million as revenue when the functional license was delivered to Rohto.  Other contingent elements of transaction price, such as contingent fees and sales-based royalties related to the supply and future sale of the product, will be recognized as revenue when the contingencies are satisfied. 

Segments and Geographic Information

Approximately

30%

and

35%

of our total revenue was generated outside of the United States for the

three

months ended

March 

31,

2018

and

2017,

respectively.

Stock-Based Compensation

Prior to the Effective Date, the Company, from time to time, issued stock options or stock awards to employees, directors, consultants, and other service providers under its

2002

Long-Term Incentive Plan (“LTIP”) or

2013

Equity Incentive Plan (“EIP” and, together with the LTIP, the “Incentive Plans”). In some cases, it had issued compensatory warrants to service providers outside the Incentive Plans (See Note

6

– Equity and Stock-Based Compensation

).

In

July 2016,

the Board of Directors approved, and in

August 2016

it amended, the Company’s

2016

Omnibus Incentive Compensation Plan (the

“2016

Omnibus Plan”). As of

November 21, 2016,

the Majority Stockholders executed a written consent adopting and approving the

2016

Omnibus Plan, as amended and restated, which provides for the Company to grant equity and cash incentive awards to officers, directors and employees of, and consultants to, the Company and its subsidiaries. There were

no

options granted during the

three

months ended

March 31, 2018.

22,500

stock options were granted during the

three

months ended

March 31, 2017.

The fair value of employee stock options is measured at the date of grant. Expected volatilities for the

2016

Omnibus Plan options are based on the equally weighted average historical volatility from

five

comparable public companies with an expected term consistent with ours. Expected years until exercise represents the period of time that options are expected to be outstanding. Under the Incentive Plans, expected volatilities were based on historical volatility of the Company’s stock, and Company data was utilized to estimate option exercises and employee terminations within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company estimated that the dividend rate on its common stock will be zero.  

Stock-based compensation for awards granted to non-employees is periodically re-measured as the underlying awards vest. The Company recognizes an expense for such awards throughout the performance period as the services are provided by the non-employees, based on the fair value of these options and warrants at each reporting period. The fair value of stock options and compensatory warrants issued to service providers utilizes the same methodology with the exception of the expected term. For awards to non-employees, the Company estimates that the options or warrants will be held for the full term.

The Company adopted new accounting guidance on

January 1, 2017

related to stock-based compensation arrangements. Under the new guidance, excess tax benefits and tax deficiencies related to stock-based compensation awards are recognized as income tax expenses or benefits in the income statement, and excess tax benefits are classified along with other income tax cash flows in the operating activities section of the condensed consolidated statement of cash flows. Additionally, the Company elected to account for forfeitures of stock-based awards as they occur, as opposed to estimating those prior to their occurrence. The adoption of this new guidance did

not

have a material impact on the Company's consolidated financial statements in any period.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, current income tax expense or benefit is the amount of income taxes expected to be payable or refundable for the current year. A deferred income tax asset or liability is recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized. Tax rate changes are reflected in income during the period such changes are enacted. All of our tax years remain subject to examination by the tax authorities.

The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income before taxes. There were

no

such items in

2018

and

2017.

Basic and Diluted Earnings (Loss) per Share

Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding (including contingently issuable shares when the contingencies have been resolved) during the period.

For periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all dilutive potential common shares is anti-dilutive. For periods of net income, and when the effects are

not

anti-dilutive, diluted earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of shares outstanding (including contingently issuable shares when the contingencies have been resolved) plus the impact of all potential dilutive common shares, consisting primarily of common stock options and stock purchase warrants using the treasury stock method, and convertible debt using the if-converted method. 

All of the Company’s outstanding stock options and warrants were considered anti-dilutive for the

three

months ended

March 

31,

2018

and

2017.

The total number of anti-dilutive shares underlying common stock options and warrants exercisable for common stock, which have been excluded from the computation of diluted loss per share for the periods presented, was as follows:

	Three months ended March 31, 201 8		Three months ended March 31, 201 7
Shares underlying:
Common stock options		742,084		1,225,833
Stock purchase warrants		6,180,000		6,180,000

Reclassifications

Certain reclassification have been made to the prior year financial statements to conform to the current year presentation, including the addition of restricted cash to cash and cash equivalents on the consolidated statements of cash flows as a result of the adoption of new accounting guidance.

Recently Adopted Accounting Pronouncements

As previously discussed, the Company adopted new accounting guidance for revenue recognition effective

January 1, 2018

which did

not

have a material impact on the Company's financial statements.

In

July 2015,

the FASB issued guidance for the accounting for inventory. The main provisions are that an entity should measure inventory within the scope of this update at the lower of cost and net realizable value, except when inventory is measured using LIFO or the retail inventory method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. In addition, the Board has amended some of the other guidance in Topic

330

to more clearly articulate the requirements for the measurement and disclosure of inventory. The amendments in this update for public business entities are effective for fiscal years beginning after

December 15, 2016,

including interim periods within those fiscal years. The amendments in this update should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We adopted this pronouncement effective

January 1, 2017;

the adoption did

not

have a material impact to our consolidated financial statements.

In

November 2015,

the FASB issued accounting guidance to simplify the presentation of deferred taxes. Previously, U.S. GAAP required an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts. Under this guidance, deferred tax liabilities and assets will be classified as noncurrent amounts. The standard is effective for reporting periods beginning after

December 15, 2016.

We adopted this pronouncement effective

January 1, 2017;

the adoption did

not

have a material impact to our consolidated financial statements.

In

November 2016,

the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) amending the presentation of restricted cash within the consolidated statements of cash flows. The new guidance requires that restricted cash be added to cash and cash equivalents on the consolidated statements of cash flows. The Company adopted this ASU on

January 

1,

2018

on a retrospective basis with the following impacts to our consolidated statements of cash flows for the

three

months ended

March 31, 2017:

	Previously Reported			Adjustment		As Revised
Net cash used in investing activities	$	(13	)	$	13	$	-

In

January 2017,

the FASB issued guidance intended to simplify the subsequent measurement of goodwill by eliminating Step

2

from the goodwill impairment test. Under the existing guidance, in computing the implied fair value of goodwill under Step

2,

an entity is required to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities), following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under the new guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should

not

exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The guidance also eliminates the requirements for any reporting unit with a

zero

or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step

2

of the goodwill impairment test. An entity is required to adopt the new guidance on a prospective basis. The new guidance is effective for the Company for its annual or any interim goodwill impairment tests for fiscal years beginning after

December 15, 2021.

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January 1, 2017.

We adopted this pronouncement effective

January 1, 2017;

the adoption did

not

have a material impact to our consolidated financial statements upon adoption since goodwill was

not

considered impaired with the adoption of Accounting Standards Update

2017

-

04.

However, when we performed our interim goodwill impairment test, comparing the fair value of our

one

reporting unit with its carrying amount as of

June 30, 2017,

the carrying amount exceeded our reporting unit's fair value by approximately

$2.8

 million. As a result we recognized a non-cash goodwill impairment charge of approximately

$2.1

 million to write-down goodwill to its estimated fair value of

zero

as of

June 30, 2017.

Unadopted Accounting Pronouncements

In

February 2016,

the FASB issued guidance for accounting for leases. The guidance requires lessees to recognize assets and liabilities related to long-term leases on the balance sheet and expands disclosure requirements regarding leasing arrangements. The guidance is effective for reporting periods beginning after

December 15, 2018

and early adoption is permitted. The guidance must be adopted on a modified retrospective basis and provides for certain practical expedients. We are currently evaluating the impact that this guidance will have on our consolidated financial statements.

We have evaluated all other issued and unadopted Accounting Standards Updates and believe the adoption of these standards will

not

have a material impact on our results of operations, financial position, or cash flows.

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Note 3 - Distribution, Licensing and Collaboration Arrangements

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Distributors and License Agreement [Text Block]

Note

3

– Distribution, Licensing and Collaboration Arrangements

Distribution and License Agreement with Rohto

In

January 2015,

we granted to Rohto Pharmaceutical Co., Ltd. (“Rohto”) a royalty bearing, nontransferable, exclusive license, with limited right to sublicense, to use certain of the Company’s intellectual property for the development, import, use, manufacturing, marketing, sale and distribution for all wound care and topical dermatology applications of the Aurix System and related intellectual property and know-how in human and veterinary medicine in Japan in exchange for an upfront payment from Rohto of

$3.0

million. The agreement also contemplates additional royalty payments based on the net sales of Aurix in Japan and an additional future cash payment if and when the reimbursement price for the national health insurance system in Japan has been achieved after marketing authorization as described below. In connection with and effective as of the entering into the Rohto Agreement, we amended an existing licensing and distribution agreement with Millennia Holdings, Inc. (“Millennia”) to terminate it and allow us to transfer the exclusivity rights from Millennia to Rohto. In connection with this amendment we paid a

one

-time, non-refundable fee of

$1.5

million to Millennia upon our receipt of the

$3.0

million upfront payment from Rohto, and we

may

be required to make certain future payments to Millennia if we receive the milestone payment from Rohto as well as future royalty payments based upon net sales in Japan. Rohto has assumed all responsibility for securing the marketing authorization in Japan, while we will provide relevant product information, as well as clinical and other data, to support Rohto’s efforts. 

Collaboration Agreement with Restorix Health

On

March 22, 2016,

we entered into a Collaboration Agreement (the “Collaboration Agreement”) with Restorix Health (“Restorix”), pursuant to which we agreed to provide Restorix with certain limited geographic exclusivity benefits over a defined period of time for the usage of the Aurix System in up to

30

of the approximately

200

hospital outpatient wound care clinics with which Restorix has a management contract (the “RXH Partner Hospitals”), in exchange for Restorix making minimum commitments of patients enrolled in

three

prospective clinical research studies primarily consisting of patient data collection (the “Protocols”) necessary to maintain exclusivity under the Collaboration Agreement. The initial period under the Collaboration Agreement expired in March

2018

and remains subject to extension with the mutual consent of the parties.

Pursuant to the Collaboration Agreement, the Company agreed to provide: (i) clinical support services by its clinical staff as reasonably agreed between the Company and Restorix as necessary and appropriate, (ii) reasonable and necessary support regarding certain reimbursement activities, (iii) coverage of Institutional Review Board (“IRB”) fees and payment to Restorix for certain training costs subject to certain limitations and (iv) community-focused public relations materials for participating RXH Partner Hospitals to promote the use of Aurix and participation in the Protocols. Pursuant to the Collaboration Agreement, Restorix agreed to: (i) provide access and support as reasonably necessary and appropriate at up to

30

RXH Partner Hospitals to identify and enroll patients into the Protocols, including senior executive level support and leadership to the collaboration and its enrollment goals and (ii) reasonably assist the Company to correct through a query process, any patient data submitted having incomplete or inaccurate data fields. 

Subject to the satisfaction of certain conditions, during the term of the Collaboration Agreement: (i) Restorix will have site specific geographic exclusivity for usage of Aurix in connection with treatment of patients in the Protocols within a

30

mile radius of each RXH Partner Hospital, and (ii) other than with respect to existing CED sites, the Company will

not

provide corporate exclusivity with any other wound management company operating in excess of

19

wound care facilities for any similar arrangement.

Under the Collaboration Agreement, the Company will pay Restorix or the RXH Partner Hospital, as the case

may

be, a per patient data collection (administrative) fee upon full completion and delivery of a patient data set. In addition, the Company is responsible to pay for any IRB fees necessary to conduct the Protocols and enroll patients, and to pay Restorix a training cost stipend per site. Each RXH Partner Hospital will pay the Company the then-current product price (

$700

in

2018

) as set forth in the Collaboration Agreement.

Boyalife Distribution Agreement

Effective as of

May 5, 2016,

the Company and Boyalife Hong Kong Ltd. (“Boyalife”), an entity affiliated with the Company’s significant shareholder, Boyalife Investment Fund I, Inc., entered into an Exclusive License and Distribution Agreement (the “Boyalife Distribution Agreement”) with an initial term of

five

years, unless the agreement is terminated earlier in accordance with its terms.  Under this agreement, Boyalife received a non-transferable, exclusive license, with limited right to sublicense, to use certain of the Company’s intellectual property relating to its Aurix System for the purposes and in the territory specified below.  Under the agreement, Boyalife is entitled to import, use for development, promote, market, sell and distribute the Aurix Products in greater China (China, Hong Kong, Taiwan and Macau) for all regenerative medicine applications, including but

not

limited to wound care and topical dermatology applications in human and veterinary medicine.  “Aurix Products” are defined as the combination of devices to produce a wound dressing from the patient’s blood - as of

May 5, 2016

consisting of centrifuge, wound dressing kit and reagent kit.  Under the Boyalife Distribution Agreement, Boyalife is obligated to pay the Company (a)

$500,000

within

90

days of approval of the Aurix Products by the China Food and Drug Administration (“CFDA”), but

no

earlier than

December 31, 2018,

and (b) a distribution fee per wound dressing kit and reagent kit of

$40,

payable quarterly, subject to an agreement by the parties to discuss in good faith the appropriate distribution fee if the pricing of such kits exceeds the current general pricing in greater China.   Under the agreement, Boyalife is entitled, with the Company’s approval (

not

to be unreasonably withheld or delayed) to procure devices from a

third

party in order to assemble them with devices supplied by the Company to make the Aurix Products.  Boyalife also has a right of

first

refusal with respect to the Aurix Products in specified countries in the Asia Pacific region excluding Japan and India, exercisable in exchange for a payment of

no

greater than

$250,000

in the aggregate.  If Boyalife files a new patent application for a new invention relating to wound dressings, the Aurix Products or the Company’s technology, Boyalife will grant the Company a free, non-exclusive license to use such patent application outside greater China during the term of the Boyalife Distribution Agreement.

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Note 4 - Receivables

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note

4

– Receivables

Accounts and other receivables, net consisted of the following:

	March 31, 2018			December 31, 2017
Trade receivables	$	68,285		$	64,387
Other receivables		275,295			355,839
		343,580			420,226
Less allowance for doubtful accounts		(1,975	)		(305,895	)
Accounts and other receivables, net	$	341,605		$	114,331

Other receivables at

March 31, 2018

and

December 31, 2017

primarily consisted of an agreed settlement amount on the prior value added tax receivable due from the contract manufacturer of the former Angel product line which was received on

April 9, 2018

and a quarter end royalty payable for the Aldeflour product. The allowance for doubtful accounts at

March 31, 2018

of approximately

$2,000

reflects the estimated reserve for trade receivables and the

December 31, 2017

allowance reflects a full reserve against the value added tax receivable. A bad debt recovery of approximately

$240,000

was recognized concurrent with the execution of the settlement agreement in the

three

months ended

March 31, 2018.

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Note 5 - Property and Equipment

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

Note

5

 – Property and Equipment

Property and equipment, net consisted of the following:

	March 31, 201 8			December 31, 2017
Medical equipment	$	396,818		$	401,719
Office equipment		38,104			48,888
Software		257,619			257,619
Manufacturing equipment		34,899			34,899
Leasehold improvements		19,215			19,215
		746,655			762,340
Less accumulated depreciation and amortization		(553,051	)		(538,724	)
Property and equipment, net	$	193,604		$	223,616

Depreciation expense of property and equipment was approximately

$26,000

 and

$97,000

 for the

three

months ended

March 31, 2018

and

2017,

respectively.

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Note 6 - Equity and Stock-based Compensation

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

Note

6

– Equity and Stock-Based Compensation

Under the Second Amended and Restated Certificate of Incorporation of the Company, it has the authority to issue a total of

32,500,000

shares of capital stock, consisting of: (i)

31,500,000

shares of common stock and

1,000,000

shares of preferred stock, par value

$0.0001

per share, which will have such rights, powers and preferences as the board of directors of the Company (the “Board of Directors”) shall determine.

Series A Preferred Stock

On

May 5, 2016 (

the “Effective Date”), the effective date of the Company’s emergence from bankruptcy under a confirmed Plan of Reorganization (the “Plan”), the Company filed a Certificate of Designations of Series A Preferred Stock with the Delaware Secretary of State, designating

29,038

shares of the Company’s undesignated preferred stock, par value

$0.0001

per share, as Series A Preferred Stock (the “Series A Preferred Stock”). On the Effective Date, the Company issued

29,038

shares of Series A Preferred Stock to Deerfield in accordance with the Plan pursuant to the exemption from the registration requirements of the Securities Act provided by Section

1145

of the Bankruptcy Code. Deerfield did

not

receive any shares of common stock or other equity interests in the Company.

The Series A Preferred Stock has

no

stated maturity date, is

not

convertible or redeemable, and carries a liquidation preference of

$29,038,000,

which is required to be paid to holders of such Series A Preferred Stock before any payments are made with respect to shares of common stock (and other capital stock that is

not

issued on parity or senior to the Series A Preferred Stock) upon a liquidation or change in control transaction.  For so long as Series A Preferred Stock is outstanding, the holders of Series A Preferred Stock have the right to nominate and elect

one

member of the Board of Directors.   The Series A Preferred Stock has voting rights, voting with the common stock as a single class, with each share of Series A Preferred Stock having the right to

five

votes, which currently represents approximately

one

percent (

1%

) of the voting rights of the capital stock of the Company.  The holders of Series A Preferred Stock have the right to approve certain transactions and incurrences of debt. Among other restrictions, the Certificate of Designations for our Series A Preferred Stock limits the Company’s ability to (i) issue securities that are senior or

pari passu

with the Series A Preferred Stock, (ii) incur debt other than for working capital purposes

not

in excess of

$3.0

million, (iii) issue securities that are junior to the Series A Preferred Stock and that provide certain consent rights to the holders of such junior securities in connection with a liquidation or contain certain liquidation preferences, (iv) pay dividends on or purchase shares of its capital stock, and (v) change the authorized number of members of its Board of Directors to a number other than five, in each case without the consent of holders representing at least

two

-thirds of the outstanding shares of Series A Preferred Stock. The Series A Preferred Stock is classified in equity.

Stock Purchase Warrants

As part of the Plan, the Company also issued Warrants to purchase

6,180,000

shares of unregistered common stock to certain investors participating in the recapitalization of the Company. The Warrants terminate on

May 5, 2021

and are currently exercisable at exercise prices ranging from

$0.50

per share to

$0.75

per share.  The number of shares of common stock underlying a Warrant and its exercise price are subject to customary adjustments upon subdivisions, combinations, payment of stock dividends, reclassifications, reorganizations and consolidations. The Warrants are classified in equity. 

Stock-Based Compensation

In

July 2016,

the Board of Directors approved, and on

August 4, 2016,

the Board amended, the Company’s

2016

Omnibus Incentive Plan (the

“2016

Omnibus Plan”) to include an evergreen provision, intended to increase the maximum number of shares issuable under the Omnibus Plan on the

first

day of each fiscal year (starting on

January 1, 2017)

by an amount equal to

six

percent (

6%

) of the shares reserved as of the last day of the preceding fiscal year, provided that the aggregate number of all such increases

may

not

exceed

1,000,000

shares. As of

November 21, 2016,

the Majority Stockholders executed a written consent adopting and approving the

2016

Omnibus Plan, as amended and restated, which provides for the Company to grant equity and cash incentive awards to officers, directors and employees of, and consultants to, the Company and its subsidiaries. We were authorized to issue up to

1,685,400

shares of common stock under the

2016

Omnibus Plan as of

March 31, 2018. 

A summary of stock option activity under the

2016

Omnibus Plan during the

three

months ended

March 31, 2018

is presented below:

Stock Options – 2016 Omnibus Plan	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2018		861,250		$	1.04		8.57	$	-
Granted		-			-		-	$	-
Exercised		-			-
Forfeited or expired		(119,166	)	$	1.31		-	$	-
Outstanding at March 31, 2018		742,084		$	1.00		6.56	$	-
Exercisable at March 31, 2018		660,418		$	1.00		6.34	$	-

There were

no

stock options granted under the

2016

Omnibus Plan during the

three

months ended

March 31, 2018.

The fair value of stock options vested during the

three

months ended

March 31, 2018

was

zero

.

No

stock options were exercised during the

three

months ended

March 31, 2018.

As of

March 31, 2018,

there was approximately

$10,000

of total unrecognized compensation cost related to non-vested stock options, and that cost was expected to be recognized over a weighted-average period of

0.94

years. 

The Company recorded stock-based compensation expense in the periods presented as follows:

	Three Months ended March 31, 201 8		Three Months ended March 31, 201 7
Sales and marketing	$	-	$	1,122
Research and development		1,324		3,111
General and administrative		1,659		11,575
	$	2,983	$	15,808

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Note 7 - Fair Value Measurements

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note

7

– Fair Value Measurements

Financial Instruments Carried at Cost

Short-term financial instruments in our condensed consolidated balance sheets, including cash and cash equivalents other than money market funds (which are carried at fair value), accounts, and other receivables and accounts payable, are carried at cost which approximates fair value, due to their short-term nature.

Fair Value Measurements

Our condensed consolidated balance sheets include certain financial instruments that are carried at fair value. Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These tiers include:

●	Level  1,	defined as observable inputs such as quoted prices in active markets for identical assets;
●	Level  2,	defined as observable inputs other than Level 1 prices such as quoted prices for similar assets; quoted  prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
●	Level  3,	defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, we perform a detailed analysis of our assets and liabilities that are measured at fair value. All assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently, and therefore have little or

no

price transparency are classified as Level

3.

Financial Assets and Liabilities Measured at Fair Value

The Company had

no

financial assets and liabilities measured at fair value on a recurring or non-recurring basis as of

March 31, 2018

or

December 31, 2017. 

Non-Financial Assets and Liabilities Measured at Fair Value

The Company’s property and equipment are measured at fair value on a non-recurring basis, upon establishment pursuant to fresh start accounting.

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Note 8 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note

8

– Commitments and Contingencies

As of the Effective Date, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with certain accredited investors who acquired common shares in accordance with the Plan of Reorganization (the “Recapitalization Investors”).  The Registration Rights Agreement provides certain resale registration rights to the Recapitalization Investors with respect to the common shares they received.  Pursuant to the Registration Rights Agreement, the Company filed, and has to update periodically, a registration statement with the U.S. Securities and Exchange Commission that covers the resale of all shares of common stock issued to the Investors on the Effective Date until such time as such shares have been sold or

may

be sold without registration or restriction pursuant to Rule

144

under the Securities Act, subject to the Company's ability to suspend sales under the registration statement in certain circumstances. As the Company does

not

qualify for forward incorporation by reference, the Company has caused the suspension of sales under the registration statement pending the filing and effectiveness of a post-effective amendment containing updated financial information.

Our primary office and warehouse facilities are located in Gaithersburg, Maryland, and comprise approximately

12,000

square feet. The facilities fall under

two

leases with monthly rent, including our share of certain annual operating costs and taxes, at approximately

$18,000

in total per month and expiring in

September 2019.

In addition, we subleased an approximately

2,100

square foot facility in Nashville, Tennessee, which was utilized as a commercial operations office. The sublease was approximately

$4,000

per month excluding our share of annual operating expenses, and was due to expire

April 30, 2018.

Effective

January 28, 2018,

we executed a sublease termination agreement which terminated our obligations remaining on the sublease in exchange for our forfeiture of the approximately

$4,000

security deposit on the sublease. We also lease a

16,300

square foot facility located in Durham, North Carolina. Monthly rent, including our share of certain annual operating costs and taxes, is approximately

$22,000

per month and the lease expires on

December 31, 2018.

As a result of our discontinuance of the ALD-

401

clinical trial, the Company ceased use of the facility in Durham, North Carolina on

July 31, 2014,

and sublet the facility beginning

August 1, 2014.

The sublease rent is approximately

$14,000

per month and also expires

December 31, 2018.

Due to non-payment on the lease subsequent to

December 31, 2017,

we have been declared in default on the lease.

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Liquidity, Policy [Policy Text Block]

Liquidity

Our operations are subject to certain risks and uncertainties including, among others, current and potential competitors with greater resources, dependence on significant customers, lack of operating history, uncertainty of future profitability and possible fluctuations in financial results. Since our inception, we have financed our operations by raising debt, issuing equity and equity-linked instruments, and executing licensing arrangements, and to a lesser extent by generating royalties and product revenues. We have incurred, and continue to incur, recurring losses and negative cash flows. During the quarter ended

September 30, 2017,

we withdrew our attempted registered offering and related refinancing of our Series A preferred stock, and exercised our rights under the Backstop Commitment in full.  As a result of that exercise, we issued an aggregate of

12,800,000

shares of common stock (the "Backstop Shares") for gross proceeds of approximately

$3.0

million, which more than doubled the number of our outstanding shares of common stock. At

March 31, 2018,

we had cash and cash equivalents on hand of approximately

$147,000

 and had

no

outstanding debt.

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. The propriety of using the going-concern basis is dependent upon, among other things, the achievement of future profitable operations, the ability to generate sufficient cash from operations, and potential other funding sources, including cash on hand, to meet our obligations as they become due.

We believe based on the operating cash requirements and capital expenditures expected for the next

twelve

months, that our current resources, projected revenue from sales of Aurix, and limited license fees and royalties from our license of certain aspects of the ALDH technology, are insufficient to support our operations beyond the next

30

days.  As such, we believe that substantial doubt about our ability to continue as a going concern exists.

We require additional capital and seek to continue financing our operations with external capital for the foreseeable future.   Any equity financings

may

cause further substantial dilution to our stockholders and could involve the issuance of securities with rights senior to the common stock. Any allowed debt financings (which are restricted under the terms of the Certificate of Designations for our Series A Preferred Stock)

may

require us to comply with onerous financial covenants and restrict our business operations. Our ability to complete additional financings is dependent on, among other things, the state of the capital markets at the time of any proposed equity or debt offering, state of the credit markets at the time of any proposed loan financing, market reception of the Company and perceived likelihood of success of our business model, and on the relevant transaction terms, among other things. We

may

not

be able to obtain additional capital as required to finance our efforts, through asset sales, equity or debt financings, or any combination thereof, on satisfactory terms or at all. Additionally, any such financing, if at all obtained,

may

not

be adequate to meet our capital needs and to support our operations.

If we are unable to secure sufficient capital to fund our operating activities or we are unable to increase revenues significantly, we

may

be forced to delay the completion of, or significantly reduce the scope of, our current business plan, including our plan to penetrate the market serving Medicare beneficiaries and fulfill the related data gathering requirements as stipulated by the Medicare CED coverage determination, delay the pursuit of commercial insurance reimbursement for our wound treatment technologies, and postpone the hiring of new personnel.   Moreover, if we are unable within the next

30

 days to secure sufficient capital to fund our ongoing operating activities, we will likely be required to cease operations.

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do

not

include all the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). In our opinion, the accompanying unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly our financial position, results of operations and cash flows. The consolidated balance sheet at

December 31, 2017,

has been derived from audited financial statements of the Company as of that date. The interim unaudited consolidated results of operations are

not

necessarily indicative of the results that

may

occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules and regulations prescribed by the SEC. We believe that the disclosures provided herein are adequate to make the information presented

not

misleading when these unaudited interim consolidated financial statements are read in conjunction with the audited financial statements and notes previously included in the Company’s Annual Report on Form

10

-K for the year ended

December 31, 2017.

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned and controlled subsidiary Aldagen, Inc. (“Aldagen”). All significant inter-company accounts and transactions are eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but

not

limited to, stock-based compensation, allowance for inventory obsolescence, allowance for doubtful accounts, contingent liabilities, fair value and depreciable lives of long-lived assets (including property and equipment, intangible assets and goodwill), deferred taxes and associated valuation allowance and the classification of our long-term debt. Actual results could differ from those estimates.

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

Credit Concentration

We generate accounts receivable from the sale of our products. In addition, other receivables consist primarily of a settlement amount for a prior value added tax receivable due from the contract manufacturer of the prior Angel product line and receivable for royalties due for sales of Aldeflour. Customers or other receivables balances in excess of

10%

of total receivables at

March 31, 2018

and

December 31, 2017

were as follows:

	March 31, 2018		December 31, 2017
Customer A		70%		72%
Customer B		10%		12%

Revenue from significant customers exceeding

10%

of total revenues for the periods presented was as follows:

	Three Months ended March 31, 2018		Three Months ended March 31, 2017
Customer B		22%		35%
Customer C		14%		-

Historically, we used single suppliers for several components of the Aurix product line. We outsource the manufacturing of various products to contract manufacturers. While we believe these manufacturers demonstrate competency, reliability and stability, there is

no

assurance that

one

or more of them will

not

experience an interruption or inability to provide us with the products needed to satisfy customer demand. Additionally, while most of the components of Aurix are generally readily available on the open market, a reagent, bovine thrombin, is available exclusively through Pfizer, with whom we have an established vendor relationship.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash Equivalents

We consider all highly liquid instruments purchased with an original maturity of

three

months or less to be cash equivalents. We maintain our cash and cash equivalents in the form of money market deposit accounts and qualifying money market funds, and checking accounts with financial institutions that we believe are credit worthy.

Receivables, Policy [Policy Text Block]

Accounts Receivables

We generate accounts receivables from the sale of our products. We provide for an allowance against receivables for estimated losses that

may

result from a customer’s inability or unwillingness to pay. The allowance for doubtful accounts is estimated primarily based upon historical write-off percentages, known problem accounts, and current economic conditions. Accounts are written off against the allowance for doubtful accounts when we determine that amounts are

not

collectable. Recoveries of previously written-off accounts are recorded when collected. At

March 31, 2018,

we maintained an allowance for doubtful accounts of approximately

$2,000.

At

December 31, 2017,

we maintained an allowance for doubtful accounts of approximately

$306,000

as we fully reserved for the value added tax receivable. Effective with an executed settlement agreement as of

March 

29,

2018,

we recognized a bad debt recovery of approximately

$240,000

and received the settlement amount on

April 9, 2018.

Inventory, Policy [Policy Text Block]

Inventory

Our inventory is produced by

third

-party manufacturers and consists of raw materials and finished goods. Inventory cost is determined on a

first

-in,

first

-out basis and is stated at the lower of cost or net realizable value. We maintain an inventory of kits, reagents, and other disposables that have shelf-lives that generally range from

18

months to

two

years.

As of

March 31, 2018,

our inventory consisted of approximately

$32,000

of finished goods and

$29,000

of raw materials. As of

December 31, 2017,

our inventory consisted of approximately

$40,000

of finished goods and

$18,000

of raw materials.

We provide for an allowance against inventory for estimated losses that

may

result in excess and obsolete inventory (i.e., from the expiration of products). Our allowance for expired inventory is estimated based upon the inventory’s remaining shelf-life and our anticipated ability to sell such inventory, which is estimated using historical usage and future forecasts, within its remaining shelf life. At

March 31, 2018

and

December 31, 2017,

the Company maintained an allowance for expired and excess and obsolete inventory of approximately

$24,000

and

$23,000,

respectively. Expired products are segregated and used for demonstration purposes only; the Company records the associated expense for this reserve to cost of sales in the consolidated statements of operations.

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

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and is depreciated, using the straight-line method, over its estimated useful life ranging from

one

to

six

years. Upon emergence from bankruptcy, property and equipment remaining lives were estimated based on the estimated remaining useful lives of the assets. Leasehold improvements are amortized, using the straight-line method, over the lesser of the expected lease term or its estimated useful life ranging from

one

to

three

years. Amortization of leasehold improvements is included in depreciation expense. Maintenance and repairs are charged to operations as incurred. When assets are disposed of, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in other income (expense).

Centrifuges

may

be sold or placed at

no

charge with customers. Depreciation expense for centrifuges that are available for sale or placed at

no

charge with customers are charged to cost of sales. Depreciation expense for centrifuges used for sales and marketing and other internal purposes are charged to general and administrative expenses.

Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset

may

not

be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. Recoverability measurement and estimating of undiscounted cash flows is done at the lowest possible level for which we can identify assets. If such assets are considered to be impaired, impairment is recognized as the amount by which the carrying amount of assets exceeds the fair value of the assets.

Revenue Recognition, Policy [Policy Text Block]

Revenue

Recognition

Prior to

January 1, 2018,

revenues were recognized when the

four

basic criteria for recognition were met: (

1

) persuasive evidence of an arrangement exists; (

2

) delivery has occurred or services have been rendered; (

3

) consideration is fixed or determinable; and (

4

) collectability is reasonably assured. The Company adopted new accounting guidance for revenue recognition effective

January 1, 2018

which did

not

have a material impact on the Company’s financial statements.

Beginning

January 1, 2018,

the Company analyzes contracts to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers; (ii) identification of distinct performance obligations in the contract; (iii) determination of contract transaction price; (iv) allocation of contract transaction price to the performance obligations; and (v) determination of revenue recognition based on timing of satisfaction of the performance obligation. The Company recognizes revenues upon the satisfaction of its performance obligations (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.

We provide for the sale of our products, including disposable processing sets and supplies to customers. Revenue from the sale of products is recognized upon shipment of products to the customers. We do

not

maintain a reserve for returned products, as in the past those returns have

not

been material and are

not

expected to be material in the future. Percentage-based fees on licensee sales of covered products are generally recorded as products are sold by licensees, and are reflected as royalties in the consolidated statements of operations. Direct costs associated with product sales and royalty revenues are recorded at the time that revenue is recognized.

License Agreement with Rohto

The Company’s license agreement with Rohto (See Note

4

– Distribution, Licensing and Collaboration Arrangements

) contains multiple promises that include the delivery of a “functional” license and other ancillary activities such as maintaining its intellectual property and providing regulatory support and training to Rohto. The Company has determined that the ancillary activities do

not

constitute distinct promises and, accordingly, the Company combined the ancillary activities with the delivered license as a single performance obligation.  The Company recognized the total non-contingent transaction price of

$3.0

million as revenue when the functional license was delivered to Rohto.  Other contingent elements of transaction price, such as contingent fees and sales-based royalties related to the supply and future sale of the product, will be recognized as revenue when the contingencies are satisfied. 

Segment Reporting, Policy [Policy Text Block]

Segments and Geographic Information

Approximately

30%

and

35%

of our total revenue was generated outside of the United States for the

three

months ended

March 

31,

2018

and

2017,

respectively.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation

Prior to the Effective Date, the Company, from time to time, issued stock options or stock awards to employees, directors, consultants, and other service providers under its

2002

Long-Term Incentive Plan (“LTIP”) or

2013

Equity Incentive Plan (“EIP” and, together with the LTIP, the “Incentive Plans”). In some cases, it had issued compensatory warrants to service providers outside the Incentive Plans (See Note

6

– Equity and Stock-Based Compensation

).

In

July 2016,

the Board of Directors approved, and in

August 2016

it amended, the Company’s

2016

Omnibus Incentive Compensation Plan (the

“2016

Omnibus Plan”). As of

November 21, 2016,

the Majority Stockholders executed a written consent adopting and approving the

2016

Omnibus Plan, as amended and restated, which provides for the Company to grant equity and cash incentive awards to officers, directors and employees of, and consultants to, the Company and its subsidiaries. There were

no

options granted during the

three

months ended

March 31, 2018.

22,500

stock options were granted during the

three

months ended

March 31, 2017.

The fair value of employee stock options is measured at the date of grant. Expected volatilities for the

2016

Omnibus Plan options are based on the equally weighted average historical volatility from

five

comparable public companies with an expected term consistent with ours. Expected years until exercise represents the period of time that options are expected to be outstanding. Under the Incentive Plans, expected volatilities were based on historical volatility of the Company’s stock, and Company data was utilized to estimate option exercises and employee terminations within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company estimated that the dividend rate on its common stock will be zero.  

Stock-based compensation for awards granted to non-employees is periodically re-measured as the underlying awards vest. The Company recognizes an expense for such awards throughout the performance period as the services are provided by the non-employees, based on the fair value of these options and warrants at each reporting period. The fair value of stock options and compensatory warrants issued to service providers utilizes the same methodology with the exception of the expected term. For awards to non-employees, the Company estimates that the options or warrants will be held for the full term.

The Company adopted new accounting guidance on

January 1, 2017

related to stock-based compensation arrangements. Under the new guidance, excess tax benefits and tax deficiencies related to stock-based compensation awards are recognized as income tax expenses or benefits in the income statement, and excess tax benefits are classified along with other income tax cash flows in the operating activities section of the condensed consolidated statement of cash flows. Additionally, the Company elected to account for forfeitures of stock-based awards as they occur, as opposed to estimating those prior to their occurrence. The adoption of this new guidance did

not

have a material impact on the Company's consolidated financial statements in any period.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, current income tax expense or benefit is the amount of income taxes expected to be payable or refundable for the current year. A deferred income tax asset or liability is recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized. Tax rate changes are reflected in income during the period such changes are enacted. All of our tax years remain subject to examination by the tax authorities.

The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income before taxes. There were

no

such items in

2018

and

2017.

Earnings Per Share, Policy [Policy Text Block]

Basic and Diluted Earnings (Loss) per Share

Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding (including contingently issuable shares when the contingencies have been resolved) during the period.

For periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all dilutive potential common shares is anti-dilutive. For periods of net income, and when the effects are

not

anti-dilutive, diluted earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of shares outstanding (including contingently issuable shares when the contingencies have been resolved) plus the impact of all potential dilutive common shares, consisting primarily of common stock options and stock purchase warrants using the treasury stock method, and convertible debt using the if-converted method. 

All of the Company’s outstanding stock options and warrants were considered anti-dilutive for the

three

months ended

March 

31,

2018

and

2017.

The total number of anti-dilutive shares underlying common stock options and warrants exercisable for common stock, which have been excluded from the computation of diluted loss per share for the periods presented, was as follows:

	Three months ended March 31, 201 8		Three months ended March 31, 201 7
Shares underlying:
Common stock options		742,084		1,225,833
Stock purchase warrants		6,180,000		6,180,000

Reclassification, Policy [Policy Text Block]

Reclassifications

Certain reclassification have been made to the prior year financial statements to conform to the current year presentation, including the addition of restricted cash to cash and cash equivalents on the consolidated statements of cash flows as a result of the adoption of new accounting guidance.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Pronouncements

As previously discussed, the Company adopted new accounting guidance for revenue recognition effective

January 1, 2018

which did

not

have a material impact on the Company's financial statements.

In

July 2015,

the FASB issued guidance for the accounting for inventory. The main provisions are that an entity should measure inventory within the scope of this update at the lower of cost and net realizable value, except when inventory is measured using LIFO or the retail inventory method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. In addition, the Board has amended some of the other guidance in Topic

330

to more clearly articulate the requirements for the measurement and disclosure of inventory. The amendments in this update for public business entities are effective for fiscal years beginning after

December 15, 2016,

including interim periods within those fiscal years. The amendments in this update should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We adopted this pronouncement effective

January 1, 2017;

the adoption did

not

have a material impact to our consolidated financial statements.

In

November 2015,

the FASB issued accounting guidance to simplify the presentation of deferred taxes. Previously, U.S. GAAP required an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts. Under this guidance, deferred tax liabilities and assets will be classified as noncurrent amounts. The standard is effective for reporting periods beginning after

December 15, 2016.

We adopted this pronouncement effective

January 1, 2017;

the adoption did

not

have a material impact to our consolidated financial statements.

In

November 2016,

the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) amending the presentation of restricted cash within the consolidated statements of cash flows. The new guidance requires that restricted cash be added to cash and cash equivalents on the consolidated statements of cash flows. The Company adopted this ASU on

January 

1,

2018

on a retrospective basis with the following impacts to our consolidated statements of cash flows for the

three

months ended

March 31, 2017:

	Previously Reported			Adjustment		As Revised
Net cash used in investing activities	$	(13	)	$	13	$	-

In

January 2017,

the FASB issued guidance intended to simplify the subsequent measurement of goodwill by eliminating Step

2

from the goodwill impairment test. Under the existing guidance, in computing the implied fair value of goodwill under Step

2,

an entity is required to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities), following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under the new guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should

not

exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The guidance also eliminates the requirements for any reporting unit with a

zero

or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step

2

of the goodwill impairment test. An entity is required to adopt the new guidance on a prospective basis. The new guidance is effective for the Company for its annual or any interim goodwill impairment tests for fiscal years beginning after

December 15, 2021.

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January 1, 2017.

We adopted this pronouncement effective

January 1, 2017;

the adoption did

not

have a material impact to our consolidated financial statements upon adoption since goodwill was

not

considered impaired with the adoption of Accounting Standards Update

2017

-

04.

However, when we performed our interim goodwill impairment test, comparing the fair value of our

one

reporting unit with its carrying amount as of

June 30, 2017,

the carrying amount exceeded our reporting unit's fair value by approximately

$2.8

 million. As a result we recognized a non-cash goodwill impairment charge of approximately

$2.1

 million to write-down goodwill to its estimated fair value of

zero

as of

June 30, 2017.

Unadopted Accounting Pronouncements

In

February 2016,

the FASB issued guidance for accounting for leases. The guidance requires lessees to recognize assets and liabilities related to long-term leases on the balance sheet and expands disclosure requirements regarding leasing arrangements. The guidance is effective for reporting periods beginning after

December 15, 2018

and early adoption is permitted. The guidance must be adopted on a modified retrospective basis and provides for certain practical expedients. We are currently evaluating the impact that this guidance will have on our consolidated financial statements.

We have evaluated all other issued and unadopted Accounting Standards Updates and believe the adoption of these standards will

not

have a material impact on our results of operations, financial position, or cash flows.

XML

Note 2 - Liquidity and Summary of Significant Accounting Principles (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	March 31, 2018		December 31, 2017
Customer A		70%		72%
Customer B		10%		12%

	Three Months ended March 31, 2018		Three Months ended March 31, 2017
Customer B		22%		35%
Customer C		14%		-

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	Three months ended March 31, 201 8		Three months ended March 31, 201 7
Shares underlying:
Common stock options		742,084		1,225,833
Stock purchase warrants		6,180,000		6,180,000

Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block]

	Previously Reported			Adjustment		As Revised
Net cash used in investing activities	$	(13	)	$	13	$	-

XML

Note 4 - Receivables (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	March 31, 2018			December 31, 2017
Trade receivables	$	68,285		$	64,387
Other receivables		275,295			355,839
		343,580			420,226
Less allowance for doubtful accounts		(1,975	)		(305,895	)
Accounts and other receivables, net	$	341,605		$	114,331

XML

Note 5 - Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Property, Plant and Equipment [Table Text Block]

	March 31, 201 8			December 31, 2017
Medical equipment	$	396,818		$	401,719
Office equipment		38,104			48,888
Software		257,619			257,619
Manufacturing equipment		34,899			34,899
Leasehold improvements		19,215			19,215
		746,655			762,340
Less accumulated depreciation and amortization		(553,051	)		(538,724	)
Property and equipment, net	$	193,604		$	223,616

XML

Note 6 - Equity and Stock-based Compensation (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Share-based Compensation, Stock Options, Activity [Table Text Block]

Stock Options – 2016 Omnibus Plan	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2018		861,250		$	1.04		8.57	$	-
Granted		-			-		-	$	-
Exercised		-			-
Forfeited or expired		(119,166	)	$	1.31		-	$	-
Outstanding at March 31, 2018		742,084		$	1.00		6.56	$	-
Exercisable at March 31, 2018		660,418		$	1.00		6.34	$	-

Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan [Table Text Block]

	Three Months ended March 31, 201 8		Three Months ended March 31, 201 7
Sales and marketing	$	-	$	1,122
Research and development		1,324		3,111
General and administrative		1,659		11,575
	$	2,983	$	15,808

XML

Note 1 - Description of Business and Bankruptcy Proceedings (Details Textual)	May 05, 2016
Platelet Rich Plasma (PRP) [Member]
Number of Products Produced	2

XML

Note 2 - Liquidity and Summary of Significant Accounting Principles (Details Textual) - USD ($)		3 Months Ended			6 Months Ended	12 Months Ended
	Mar. 29, 2018	Mar. 31, 2018	Sep. 30, 2017	Mar. 31, 2017	Jun. 30, 2017	Dec. 31, 2017
Stock Issued During Period, Shares, New Issues			12,800,000
Proceeds from Issuance of Common Stock			$ 3,000,000
Cash and Cash Equivalents, at Carrying Value, Ending Balance		$ 146,935				$ 693,515
Debt, Long-term and Short-term, Combined Amount, Total		0
Allowance for Doubtful Accounts Receivable, Ending Balance		2,000				306,000
Allowance for Doubtful Accounts Receivable, Recoveries	$ 240,000	240,000
Inventory, Finished Goods, Gross, Total		32,000				40,000
Inventory, Raw Materials, Gross, Total		29,000				18,000
Inventory Valuation Reserves, Ending Balance		$ 24,000				23,000
Percentage of Revenues Generated Outside of United States		30.00%		35.00%
Income Tax Examination, Penalties and Interest Expense, Total		$ 0				$ 0
Number of Reporting Units		1
Goodwill, Carrying Amount Exceeding Fair Value					$ 2,800,000
Goodwill, Impairment Loss					2,100,000
Goodwill, Ending Balance					$ 0
The 2016 Omnibus Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		0		22,500
License [Member]
Contract with Customer, Liability, Revenue Recognized		$ 3,000,000
Minimum [Member]
Inventory Shelf Life		1 year 180 days
Property, Plant and Equipment, Useful Life		1 year
Minimum [Member] | Leasehold Improvements [Member]
Property, Plant and Equipment, Useful Life		1 year
Maximum [Member]
Inventory Shelf Life		2 years
Property, Plant and Equipment, Useful Life		6 years
Maximum [Member] | Leasehold Improvements [Member]
Property, Plant and Equipment, Useful Life		3 years

XML

Note 2 - Liquidity and Summary of Significant Accounting Principles - Summary of Concentration Risk (Details) - Customer Concentration Risk [Member]	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Accounts Receivable [Member] | Customer A [Member]
Concentration percentage	70.00%		72.00%
Accounts Receivable [Member] | Customer B [Member]
Concentration percentage	10.00%		12.00%
Sales Revenue, Net [Member] | Customer B [Member]
Concentration percentage	22.00%	35.00%
Sales Revenue, Net [Member] | Customer C [Member]
Concentration percentage	14.00%

XML

Note 2 - Liquidity and Summary of Significant Accounting Policies - Anti-dilutive Securities Excluded From the Computation of Diluted Earnings (Loss) Per Share (Details) - shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Employee Stock Option [Member]
Anti-dilutive securities (in shares)	742,084	1,225,833
Warrant [Member]
Anti-dilutive securities (in shares)	6,180,000	6,180,000

XML

Note 2 - Liquidity and Summary of Significant Accounting Principles - Adoption of ASU 2016-18 (Details)	3 Months Ended
	Mar. 31, 2017 USD ($)
Net cash used in investing activities
Previously Reported [Member]
Net cash used in investing activities	(13)
Restatement Adjustment [Member] | Accounting Standards Update 2016-18 [Member]
Net cash used in investing activities	$ 13

XML

Note 3 - Distribution, Licensing and Collaboration Arrangements (Details Textual)			1 Months Ended
	May 05, 2016 USD ($) $ / item	Mar. 22, 2016	Jan. 31, 2015 USD ($)	Mar. 31, 2018 USD ($)
Distribution Agreement with Boyalife [Member] | Affiliated Entity [Member]
License Agreement, Original Term	5 years
Due from Related Parties, Current, Total	$ 500,000
Maximum Payment on Right Excercisable	$ 250,000
Distribution Agreement with Boyalife [Member] | Affiliated Entity [Member] | Aurix System [Member]
Distribution Fee per Unit Sold | $ / item	40
Restorix Distribution Agreement [Member]
Collaboration Agreement, Term		2018 years
Current Product Price				$ 700
Rohto Pharmaceutical Co., Ltd [Member]
Proceeds from License Fees Received			$ 3,000,000
Millennia Holdings, Inc [Member]
Payments for Terminated Licenses			$ 1,500,000

XML

Note 4 - Receivables (Details Textual) - USD ($)		3 Months Ended
	Mar. 29, 2018	Mar. 31, 2018	Dec. 31, 2017
Allowance for Doubtful Accounts Receivable, Current, Ending Balance		$ 1,975	$ 305,895
Allowance for Doubtful Accounts Receivable, Recoveries	$ 240,000	240,000
Trade Accounts Receivable [Member]
Allowance for Doubtful Accounts Receivable, Current, Ending Balance		$ 2,000

XML

Note 4 - Receivables - Accounts and Other Receivable, Net (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Accounts receivable, gross	$ 343,580	$ 420,226
Less allowance for doubtful accounts	(1,975)	(305,895)
Accounts and other receivables, net	341,605	114,331
Trade Accounts Receivable [Member]
Accounts receivable, gross	68,285	64,387
Less allowance for doubtful accounts	(2,000)
Other Receivables [Member]
Accounts receivable, gross	$ 275,295	$ 355,839

XML

Note 5 - Property and Equipment (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Depreciation, Depletion and Amortization, Total	$ 26,084	$ 310,045

XML

Note 5 - Property and Equipment - Property and Equipment, Net (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Property, plant, and equipment, gross	$ 746,655	$ 762,340
Less accumulated depreciation and amortization	(553,051)	(538,724)
Property and equipment, net	193,604	223,616
Medical Equipment [Member]
Property, plant, and equipment, gross	396,818	401,719
Office Equipment [Member]
Property, plant, and equipment, gross	38,104	48,888
Technology Equipment [Member]
Property, plant, and equipment, gross	257,619	257,619
Manufacturing Equipment [Member]
Property, plant, and equipment, gross	34,899	34,899
Leasehold Improvements [Member]
Property, plant, and equipment, gross	$ 19,215	$ 19,215

XML

Note 6 - Equity and Stock-based Compensation (Details Textual)		3 Months Ended
	May 05, 2016 USD ($) $ / shares shares	Mar. 31, 2018 USD ($) $ / shares shares	Sep. 30, 2017 shares	Mar. 31, 2017 shares	Dec. 31, 2017 USD ($) $ / shares shares	Aug. 04, 2016 shares
Authorized Shares, Common and Preferred		32,500,000
Common Stock, Shares Authorized		31,500,000			31,500,000
Preferred Stock, Shares Authorized		1,000,000			1,000,000
Preferred Stock, Par or Stated Value Per Share | $ / shares		$ 0.0001			$ 0.001
Common Stock, Par or Stated Value Per Share | $ / shares		$ 0.0001			$ 0.0001
Stock Issued During Period, Shares, New Issues			12,800,000
Preferred Stock, Liquidation Preference, Value | $		$ 29,038,000			$ 29,038,000
The 2016 Omnibus Plan [Member]
Evergreen Provision, Increase in Number of Shares Authorized Calculation, Percentage Amount of Prior Year's Reserved Shares						6.00%
Evergreen Provision, Maximum Limit of Increase to Authorized Shares						1,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		1,685,400
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		0		22,500
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		0
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total | $		$ 10,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition		343 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value | $		$ 0
Common Stock [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	6,180,000
Maximum [Member] | Common Stock [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.75
Minimum [Member] | Common Stock [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.50
Series A Preferred Stock [Member]
Preferred Stock, Shares Authorized	29,038
Common Stock, Par or Stated Value Per Share | $ / shares	$ 0.0001
Stock Issued During Period, Shares, New Issues	29,038
Preferred Stock, Liquidation Preference, Value | $	$ 29,038,000
Preferred Stock, Voting Rights, Number of Votes Per Share	5
Preferred Stock, Restrictions, Debt Ceiling Other Than for Working Capital Purposes | $	$ 3,000,000
Series A Preferred Stock [Member] | Maximum [Member]
Preferred Stock, Voting Rights, Percentage of Voting Rights of Capital Stock	1.00%

XML

Note 6 - Equity and Stock-based Compensation - Stock Option Activity (Details) - The 2016 Omnibus Plan [Member] - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Shares outstanding (in shares)	861,250
Shares outstanding, weighted-average exercise price (in dollars per share)	$ 1.04
Shares outstanding, weighted-average remaining contractual term (Year)	6 years 204 days		8 years 208 days
Shares outstanding, aggregate intrinsic value	$ 0		$ 0
Shares granted (in shares)	0	22,500
Shares granted, weighted-average exercise price (in dollars per share)
Shares granted, weighted-average remaining contractual term (Year)
Shares exercised (in shares)	0
Shares exercised, weighted-average exercise price (in dollars per share)
Shares forfeited or expired (in shares)	(119,166)
Shares forfeited or expired, weighted-average exercise price (in dollars per share)	$ 1.31
Shares outstanding (in shares)	742,084		861,250
Shares outstanding, weighted-average exercise price (in dollars per share)	$ 1		$ 1.04
Shares exercisable (in shares)	660,418
Shares exercisable, weighted-average exercise price (in dollars per share)	$ 1
Shares exercisable, weighted-average remaining contractual term (Year)	6 years 124 days

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Note 6 - Equity and Stock-based Compensation - Stock-based Compensation Expense (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Share-based compensation	$ 2,983	$ 15,808
Selling and Marketing Expense [Member]
Share-based compensation		1,122
Research and Development Expense [Member]
Share-based compensation	1,324	3,111
General and Administrative Expense [Member]
Share-based compensation	$ 1,659	$ 11,575

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Note 7 - Fair Value Measurements (Details Textual) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Fair Value, Measurements, Recurring [Member]
Assets, Fair Value Disclosure	$ 0	$ 0
Financial Liabilities Fair Value Disclosure, Total	0	0
Fair Value, Measurements, Nonrecurring [Member]
Assets, Fair Value Disclosure	0	0
Financial Liabilities Fair Value Disclosure, Total	$ 0	$ 0

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Note 8 - Commitments and Contingencies (Details Textual)	3 Months Ended
	Mar. 31, 2018 USD ($) ft²	Jan. 28, 2018 USD ($)
Office and Warehouse Facilities in Gaithersburg, Maryland Leases [Member]
Operating Leases, Area | ft²	12,000
Operating Leases of Lessee, Number of Operating Leases	2
Operating Leases, Monthly Rent Expense	$ 18,000
Commercial Operation Facility in Nashville, Tennessee [Member]
Operating Leases, Area | ft²	2,100
Operating Leases, Monthly Rent Expense	$ 4,000
Security Deposit Forfeited on Sublease		$ 4,000
Facility in Durham, North Carolina [Member]
Operating Leases, Area | ft²	16,300
Operating Leases, Monthly Rent Expense	$ 22,000
Sublease of Facility in Durham, North Carolina [Member]
Operating Leases, Sublease Rental Monthly Payments	$ 14,000