| Significant Accounting Policies | Note
3 – Significant Accounting Policies Use
of Estimates The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent
liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from these estimates. Significant estimates and assumptions include the valuation allowance related to the
Company’s deferred tax assets, and the valuation of warrants and derivative liabilities. Investments We
consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents.
The fair values of these investments approximate their carrying values. Investments with original maturities of greater than three months
and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year
are classified as long-term investments. Debt
investments are classified as trading securities and realized gains and losses are recorded using the specific identification method.
Changes in fair value, excluding credit losses and impairments, are recorded in unrealized gains (losses) from investments. Fair value
is calculated based on publicly available market information. If the cost of an investment exceeds its fair value, we evaluate, among
other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than
cost. We recognize interest income based on the stated coupon rate of the investments purchased. Property
and Equipment, Net Property
and equipment are stated at cost, net of accumulated depreciation using the straight-line method over their estimated useful lives, which
range from 5 7 Impairment
of Long-lived Assets The
Company reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. An impairment loss would be recognized when estimated future cash flows expected to result from the
use of the asset and its eventual disposition are less than its carrying amount. ENVVENO
MEDICAL CORPORATION NOTES
TO FINANCIAL STATEMENTS Income
Taxes The
Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax
assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. 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 income in the period that included
the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be
realized. ASC
740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be
sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits
as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2022
and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals
or material deviation from its position. Fair
Value of Financial Instruments The
Company measures the fair value of financial assets and liabilities based on the guidance of Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”)
which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. FASB
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 available in active markets for identical assets or liabilities trading in active markets.
Level
2 Observable
inputs other than quoted prices included in Level 1, such as quotable prices for similar assets and liabilities in active markets;
quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable
or can be corroborated by observable market data.
Level
3 Unobservable
inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
This includes certain pricing models, discounted cash flow methodologies and similar valuation techniques that use significant unobservable
inputs. Financial
instruments, including accounts payable are carried at cost, which management believes approximates fair value due to the short-term
nature of these instruments. Derivative liabilities are accounted for at fair value on a recurring basis. Net
Loss per Share The
Company computes basic and diluted loss per share by dividing net loss attributable to common stockholders by the weighted average number
of common shares outstanding during the period including warrants exercisable for little or no cash consideration. Basic and diluted
net loss per common share are the same since the inclusion of common stock issuable pursuant to the exercise of warrants and options,
would have been anti-dilutive. ENVVENO
MEDICAL CORPORATION NOTES
TO FINANCIAL STATEMENTS Stock-Based
Compensation The
Company has an Equity Incentive Plan under which the Board of Directors may grant restricted stock or stock options to employees and
nonemployees. The accounting treatment for share-based payments to employees and non-employees is substantially equivalent. Share-based
compensation cost is recorded for all option grants and awards of non-vested stock based on the grant date fair value of the award, and
is recognized over the service period required for the award. The
fair value of the Company’s stock options is estimated at the date of grant using the Black-Scholes based option valuation model.
For the expected term, the Company uses SEC Staff Accounting Bulletin No. 107 simplified method for “plain vanilla” options
with following characteristics: (i) the share options are granted at the market price on the grant date; (ii) exercisability is conditional
on performing service through the vesting date on most options; (iii) if an employee terminates service prior to vesting, the employee
would forfeit the share options; (iv) if an employee terminates service after vesting, the employee would have 30 to 90 days to exercise
the share options; and (v) the share options are nontransferable and nonhedgeable. The Company estimated the expected term of the options using the simplified method. The Company uses its stock’s
historical market information to calculate volatility used in estimating fair value of options granted. The
volatility assumption is based on the historical volatility of the Company’s common stock with an equivalent remaining expected
term. The dividend yield assumption is based on the Company’s history and expectation of future dividend payouts on the common
stock. The risk-free interest rate is based on the implied yield available on U.S. treasury zero-coupon issues with an equivalent remaining
expected term. For
option grants without performance conditions, the Company recognizes compensation expense over the requisite service period ratably,
recognizing expense for each tranche of each grant starting on the grant date. For grants that have both service and performance conditions,
the Company recognizes compensation expense using the graded attribution method. Compensation expense for grants with performance conditions
is recognized only for those awards expected to vest. Forfeitures
of unvested stock options are recorded when they occur. Loss
Contingencies The
Company will accrue an estimated loss if information available before the financial statements are issued or are available to be issued
indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements
and the amount of loss can be reasonably estimated. Recently
Adopted Accounting Standards In
May 2021, the FASB issued Accounting Standards Update 2021-04 (“ASU No. 2021-04”), Issuer’s Accounting for Certain
Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The guidance in ASU 2021-04 requires the issuer to
treat a modification of an equity-classified written call option (the “option”) that does not cause the option to become
liability-classified as an exchange of the original option for a new option. This guidance applies whether the modification is structured
as an amendment to the terms and conditions of the option or as termination of the original option and issuance of a new option. The
amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal
years. The adoption of this standard did not have a material impact on our financial statements. In
August 2020, the FASB issued Accounting Standards Update 2020-06 (“ASU 2020-06”), Accounting for Convertible Instruments
and Contracts in an Entity’s Own Equity. The amendments in ASU 2020-06 include guidance on convertible instruments and the derivative
scope exception for contracts in an entity’s own equity and simplifies the accounting for convertible instruments which include
beneficial conversion features or cash conversion features by removing certain separation models in Subtopic 470-20. Additionally, ASU
2020-06 will require entities to use the “if-converted” method when calculating diluted earnings per share for convertible
instruments. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods
within those fiscal years. The adoption of this standard did not have a material impact on our financial statements. In
January 2020, the FASB issued Accounting Standards Update 2020-01 (“ASU 2020-01”) Investments-Equity Securities (Topic 321),
Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The amendments in ASU 2020-01 clarify
certain interactions between the guidance to account for certain equity securities under Topic 321, the guidance to account for investments
under the equity method of accounting in Topic 323, and the guidance in Topic 815, which could change how an entity accounts for an equity
security under the measurement alternative or a forward contract or purchased option to purchase securities that, upon settlement of
the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting or the fair value
option in accordance with Topic 825, Financial Instruments. These amendments improve current GAAP by reducing diversity in practice and
increasing comparability of the accounting for these interactions. The amendments in this update are effective for fiscal years beginning
after December 15, 2020, and interim periods within those fiscal years. The adoption of this standard did not have a material impact
on our financial statements. Recent
Accounting Standards In
October 2021, the FASB issued Accounting Standards Update 2021-08 (“ASU No. 2021-08”), Business Combinations (Topic 805):
Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, to require that an acquirer recognize and measure
contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with
Customers. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it
had originated the contracts. The amendments in this update should be applied prospectively and are effective for fiscal years beginning
after December 15, 2022, including interim periods within those fiscal years. We do not expect the adoption of this standard to have
a material impact on our financial statements and related disclosures. ENVVENO
MEDICAL CORPORATION NOTES
TO FINANCIAL STATEMENTS |
