| SIGNIFICANT ACCOUNTING POLICIES | 2.
SIGNIFICANT ACCOUNTING POLICIES Principles
of Consolidation and Basis of Presentation The
consolidated financial statements include the accounts of Vycor Medical, Inc., and its wholly-owned subsidiaries, NovaVision, Inc. (a
Delaware corporation), NovaVision GmbH (a German corporation) and Sight Science Limited (a UK corporation), both wholly owned subsidiaries
of NovaVision, Inc. The Company is headquartered in Boca Raton, FL. All material inter-company accounts, transactions, and balances have
been eliminated in consolidation. Following the decision in April 2020 to close the German office of NovaVision, the activities of NovaVision
GmbH have been accounted for as discontinued operations. Revenue
Recognition On
January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers and all the related amendments (new revenue standard)
to all contracts. Vycor
Medical generates revenue from the sale of its surgical access system to hospitals and other medical professionals. Vycor Medical records
revenue from product sales when obligations under the terms of a contract with customers are satisfied. Generally, this occurs with the
transfer of control of the goods to customers. Vycor Medical does not provide for product returns or warranty costs. Vycor
determines revenue recognition through the following steps:
● Identification
of the contract, or contracts, with a customer
● Identification
of the performance obligations in the contract
● Determination
of the transaction price
● Allocation
of the transaction price to the performance obligations in the contract
● Recognition
of revenue when Vycor satisfy a performance obligation NovaVision
generates revenues from various programs, therapy services and other sources such as software license sales. Therapy services revenues
represent fees from NovaVision’s vision restoration therapy software, eye movement training software, diagnostic software, clinic
set up and training fees, and the professional and support services associated with the therapy. NovaVision provides vision restoration
therapy directly to patients. The typical therapy program consists of NeuroEyeCoach, performed over 2-4 weeks, and six modules of Vision
Restoration Therapy, performed over 6 months. A patient contract comprises set-up fees and monthly therapy fees. Set-up fees are recognized
at the outset of the contract and therapy revenue is recognized ratably over the therapy period. Patient therapy is restricted to being
completed by a patient within a specified time frame. Deferred
revenue results from patients paying for the therapy in advance of receiving the therapy. As
part of the adoption of ASC 606, see Note 7 to the Consolidated Financial Statements for further disaggregation of revenue. Reclassifications Certain
prior period amounts have been reclassified to conform with the current period presentation; on the cash flow statement, proceeds from and repayments of insurance
financing has been separated out rather than being netted off. Cash
and cash equivalents The
Company maintains cash balances at various financial institutions. Accounts at each institution in the U.S. are insured by the Federal
Deposit Insurance Corporation up to $ 250,000 20,951 19,154 Accounts
Receivable and Allowance for Doubtful Accounts Receivable The
Company’s accounts receivable are due from the hospitals and distributors in the case of Vycor Medical, and from patients directly
for therapy or physicians for diagnostic products in the case of NovaVision. Accounts receivable are due once products have been delivered
or at the time the therapy is initiated; however, for NovaVision therapy patients sometimes credit is extended through various payment
plans based on individual financial conditions, generally not to exceed the therapy period. The outstanding balances are stated net of
an allowance for doubtful accounts. We
have a policy of reserving for uncollectible accounts based on our best estimate of the amount of probable credit losses in our existing
accounts receivable. We extend credit to our customers based on an evaluation of their financial condition and other factors. We generally
do not require collateral or other security to support accounts receivable. We perform ongoing credit evaluations of our customers and
maintain an allowance for potential bad debts if required. We determine whether an allowance for doubtful accounts is required by evaluating
specific accounts where information indicates the customers may have an inability to meet financial obligations. In these cases, we use
assumptions and judgment, based on the best available facts and circumstances, to record a specific allowance for those customers against
amounts due to reduce the receivable to the amount expected to be collected. These specific allowances are re-evaluated and adjusted
as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance. We may also
record a general allowance as necessary. Direct write-offs are taken in the period when we have exhausted our efforts to collect overdue
and unpaid receivables or otherwise evaluate other circumstances that indicate that we should abandon such efforts. Inventories Inventories
consist of raw materials, work in process and finished goods that are stated at the lower of cost determined using the weighted average
cost method, or net realizable value. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated
costs to complete and dispose of the product. If the Company identifies excess, obsolete or unsalable items, its inventories are written
down to their realizable value in the period in which the impairment is first identified. The charge provision for inventory obsolescence
for the years ended December 31, 2023 and 2022 was $ 168 13,160 Leases The
Company has one leased building in Boca Raton, Florida that is classified as operating lease right-of use (“ROU”) assets
and operating lease liabilities in the Company’s consolidated balance sheet as per ASC 842. ROU assets and lease liabilities are
recognized based on the present value of the future minimum lease payments over the lease term at the commencement date for leases exceeding
12 months. Minimum lease payments include only the fixed lease component of the agreement. Operating lease expense is recognized on a
straight-line basis over the lease term and is included in cost of Selling, General and Administrative expenses. The
standard was effective for us beginning January 1, 2019. The Company elected the available practical expedients on adoption. The adoption
had a material impact on our consolidated balance sheets but did not have a material impact on our consolidated statements of comprehensive
loss. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases. Discontinued
Operations In
accordance with ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, a disposal
of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal
represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components
of an entity meets the criteria in paragraph 205-20-45-1E to be classified as held for sale. When all of the criteria to be classified
as held for sale are met, including management, having the authority to approve the action, commits to a plan to sell the entity, the
major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and
liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations (which
we presented as operations to be disposed and operations disposed), less applicable income taxes (benefit), shall be reported as components
of net income (loss) separate from the net income (loss) of continuing operations in accordance with ASC 205-20-45. Foreign
Currency The
Euro is the local currency of the country in which the discontinued operations of NovaVision GmbH conducts its operations and is considered
the functional currency of this entity; the GB Pound is the local currency of the country in which Sight Science Limited conducts its
operations and is considered the functional currency of this entity. All balance sheet amounts are translated to U.S. dollars using the
U.S. exchange rate at the balance sheet date except for the equity section which is translated at historical rates. Operating statement
amounts are translated using an average exchange rate for the period of operations. Foreign currency translation effects are accumulated
as part of the accumulated other comprehensive income (loss) and included in stockholders’ deficiency in the accompanying Consolidated
Balance Sheets. Educational
marketing and advertising expenses The
Company may incur costs for the education of customers on the uses and benefits of its products. The Company will include education,
marketing and advertising expense as a component of selling, general and administrative costs as such costs are incurred. There were
no such expenses for the years ended December 31, 2023 and 2022. Income
taxes We
use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under
this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred
tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements
or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance
is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is
more likely than not some portion or all of the deferred tax assets will not be realized. ASC
Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and
prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods
presented. Fixed
assets Fixed
assets are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives
of the assets. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred. Patents
and Other Intangible Assets The
Company capitalizes legal and related costs associated with the establishment and enhancement of patents for its products once patents
have been applied for. Costs associated with the development of the patented item or processes are charged to research and development
costs as incurred. The capitalized costs are amortized over the life of the patent. The Company reviews intangible assets on an annual
in accordance with the authoritative guidance. Trademarks have an indefinite life and are reviewed annually by management for impairment
in accordance with the authoritative guidance. Impairment
of long-lived assets Long-lived
assets are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable. For assets that
are to be held and used, impairment is recognized when the estimated undiscounted cash flows associated with the asset or group of assets
is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss
is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted
cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or
estimated net realizable value. Research
and Development The
Company expenses all research and development costs as incurred. For the years ended December 31, 2023 and 2022, the amounts charged
to research and development expenses were $ 22,558 0 Software
Development Costs The
Company accounts for software development costs in accordance with ASC 350-40, whereby all costs incurred during the preliminary stage
of a development project should be charged to expense as incurred. Capitalization of costs begins after the preliminary stage has been
completed, management commits to funding the project, it is probable that the project will be completed, and the software will be used
for its intended function. All post-implementation costs are charged to expense as incurred. Accordingly, direct internal and external
costs associated with the development of the features and functionality of the Company’s software, incurred during the application
development stage, are capitalized and amortized using the straight-line method of the estimated life of five years no Uses
of estimates in the preparation of financial statements The
preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimated.
To the extent management’s estimates prove to be incorrect, financial results for future periods may be adversely affected. Significant
estimates and assumptions contained in the accompanying consolidated financial statements include management’s estimate of the
allowance for uncollectible accounts receivable and provision for inventory obsolescence. Stock
Compensation The
Company recognizes the cost of all stock -based payments under the relevant authoritative accounting guidance. Stock-based payments include
any remuneration paid by the Company in shares of the Company’s common stock or financial instruments that grant the recipient
the right to acquire shares of the Company’s common stock. For stock-based payments to employees, which consist only of awards
made under the stock option plan described below, the Company accounts for the payments in accordance with the provisions of ASC Topic
718, “Stock Compensation”. Stock-based payments to consultants, service providers and other non-employees are accounted for
in accordance with ASC Topic 718, ASC Topic 505, “Equity Payments to Non-Employees” or other applicable authoritative guidance. Convertible
Instruments We
evaluate and account for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging
Activities”. Applicable
GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative
financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and
risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host
contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at
fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same
terms as the embedded derivative instrument would be considered a derivative instrument. We
account for convertible instruments (when we have determined that the embedded conversion options should not be bifurcated from their
host instruments) as follows: We record when necessary, discounts to convertible notes for the intrinsic value of conversion options
embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date
of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized
over the term of the related debt to their stated date of redemption. The embedded conversion option in connection with our convertible
debt could not be exercised unless and until we completed a Qualifying Financing transaction. Accordingly, we determined based on authoritative
guidance that the embedded conversion option is deemed to be a contingent conversion rather than active conversion option that did not
require accounting recognition at the commitment dates of the issuances of the Notes. Fair
Value Measurements We
adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous
accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The
estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and
accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these
instruments. The carrying amounts of our short and long-term credit obligations approximate fair value because the effective yields on
these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants
and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk. ASC
820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level
1 — quoted prices in active markets for identical assets or liabilities Level
2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level
3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions) The
Company has no financial instruments measured at fair value on a recurring basis. Net
Loss Per Share Basic
net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted-average number
of common shares outstanding during the period. Diluted net income (loss) per share is computed giving effect to all dilutive potential
common shares that were outstanding during the period. Dilutive potential common shares consist of incremental shares issuable upon exercise
of stock options and warrants and conversion of preferred stock and convertible debt. Such potentially dilutive shares are excluded when
the effect would be to reduce a net loss per share. The
following table sets forth the potential shares of common stock that are included in the calculation of diluted net income per share
where a net income is reported: SCHEDULE OF COMMON STOCK NOT INCLUDED IN CALCULATION OF DILUTED NET LOSS PER SHARE
December 31, 2023 December 31, 2022
Debentures convertible into common stock 3,680,460 3,451,889
Preferred shares convertible into common stock 1,272,052 1,272,052
Total 4,952,512 4,723,941
Anti-dilutive shares 4,952,512 4,723,941 Recent
Accounting Pronouncements From
time-to-time new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that
may have an impact on the Company’s accounting and reporting. The FASB issued Accounting Standards Update (ASU) 2023-07 in November 2023, to be effective for fiscal years
beginning after December 15, 2023. The ASU is to improve reportable segment disclosures. Management has assessed the ASU and has concluded
that it will not have an impact on its accounting or reporting when implemented, as the additional disclosure effects items that are not
applied at a segment level. The Company believes that other recently issued accounting pronouncements
and other authoritative guidance for which the effective date is in the future will not have an impact on its accounting or reporting
or that such impact will not be material to its financial position, results of operations and cash flows when implemented. |
